Bank error in your favour: BOQ takes $46m hit
Bank of Queensland is confident it has cleaned up mistakes on some customer accounts. The discovery of interest rate and fee errors will cost BOQ $46 million.
The regional bank will refund $34.5 million to 38,000 customers and pay another $11.5 million to fix the errors. All refunds are expected to be made by the end of 2014.
The problems, which were found during an internal review of BOQ's business, were caused by several issues, "including overly complex products which required too many manual processes", the bank said on Thursday. Some errors dated back to 2004.
"This is a very thorough process. We are confident that we have discovered the legacy product issues that were in the business," a BOQ spokesman said, adding that the review was undertaken after incorrect interest charges were found on some accounts last October.
An Australian Securities and Investments Commission spokesman said the regulator had requested the review to ensure all BOQ's affected customers were reimbursed, and that the bank's compliance systems were sound.
BOQ said in April it would refund $12 million to 6000 clients following the October discovery.
The BOQ spokesman said the bank had been "very open and transparent" about dealing with the problems. Accounting giant Ernst & Young was appointed to examine the internal review.
The BOQ spokesman said both ASIC and the Australian Prudential Regulation Authority had been kept apprised of its review.
Investors shrugged off BOQ's statement about the errors, as the bank added in the same ASX statement that its profit before tax for the year to August 31 was expected to be near the top of analysts' forecast range of $339-$368 million.
BOQ added that its cash profit would not be affected by the payouts and the costs were being booked as a one-off legacy item in the 2012-13 results. BOQ shares edged up 0.21 per cent to $9.72.
BBY analyst Brett Le Mesurier said it was encouraging that the bank had looked into the errors rather than let them fester.
"The point is that they found it, whereas previous management created the problem. So it is a sign of an improvement in the business rather than a deterioration," Mr Le Mesurier said.
A BOQ customer said he had several times informed his local branch of interest rate errors on his loans. He said he was concerned that the 2004 cutoff point for the review had not gone back far enough.
BOQ chief executive Stuart Grimshaw said he was disappointed and frustrated the problems had not been identified earlier, but hailed the review that discovered them.