BOQ to pay out $46 million in refunds and remediation costs

"Incorrect application" of interest rates and fees identified in sweeping business review.

Bank of Queensland (BOQ) will refund customers $34.5 million in excess interest rates and fees and shell out an extra $11.5 million in remediation costs.

On completing a sweeping business review, the bank said it had uncovered "legacy issues" that had led to "the incorrect application" of interest rates and fees. The issues, caused by "overly complex" products, affected about 4% of the bank's customers.

The refund and remediation costs will be treated as one-offs and have no bearing on the bank's normalised full-year net profit.

On announcing the refund, BOQ said profit before tax for the year to 31 August was expected to come in at the top end of analysts’ consensus range of $339 million to $368 million.

In addition, the final 2012-2013 dividend payment was expected to be at least equal to the interim dividend payment of 28 cents (see Cliona O'Dowd's Collected Wisdom).

BOQ started its business review, which covered products, processes and systems, after finding a mortgage offset account issue late last year.

Chief executive officer Stuart Grimshaw said "the completion of the review represented an important milestone in BOQ’s recovery".

"The problems have been caused by a number of issues, including overly complex products, which required too many manual processes," Mr Grimshaw said.

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