It’s been a big week for regulators waving their legal ‘big sticks’ (and lawyers) – yesterday ASIC joined the ACCC on the legal warpath, announcing separate legal actions against two regional banks – The Bank of Queensland and Bendigo and Adelaide Bank.
Those actions followed the announcement on Tuesday by the competition and consumer regulator, the ACCC announced it was taking Medibank Private to court over allegedly telling customers they could not make claims for certain types of surgery even though their policies covered those procedures.
The Australian Competition and Consumer Commission claimed Medibank’s subsidiary brand ahm Health Insurance told members making claims or inquiries they were not covered for joint investigations or reconstruction surgery.
ASIC’s actions are sort of similar. It is taking action against Bank of Queensland and Bendigo and Adelaide Bank over what it says were unfair contract terms that gave the banks power to unilaterally change the terms of a loan.
The country’s two largest regional lenders on Wednesday said the Australian Securities and Investments Commission (ASIC) had started action over contracts that were in place between 2016 and 2019.
ASIC said some of the terms the banks had used in their contracts were unfair, and these would be “void and unenforceable” if a court agrees with the regulator.
Some of the contract terms were unfair because they caused a “significant imbalance” in the parties’ rights, they were not needed to protect the banks’ interests, and the terms would cause “detriment” to the small business if enforced.
The Bank of Queensland says it had started a review of all small-business lending contracts since November 2016 and would compensate any wronged customers. It says it is co-operating with ASIC.
Bendigo and Adelaide said in its statement the proceedings against it relate to a version of its small business loan contracts under each of its Delphi Bank and Rural Bank brands in place between 2016 and June 2019.
“The relevant terms and conditions appear in previous versions of small business loan contracts. These contracts were updated in July 2019 in response to additional guidance provided by ASIC via Report 565 released last year and the new Banking Code of Practice. The Bank is cooperating with ASIC in relation to the court proceedings with a view to reaching a mutually agreed outcome,” the bank said.
These are in addition to 12 separate legal cases ASIC says it has running against banks and other financial groups resulting from the Hayne Royal Commission.
Bank of Queensland shares eased 0.8% to $8.99 yesterday but Bendigo shares edged up 0.2% to $10.47.
