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The non-major bank has been sanctioned after the BCCC found “serious and systemic” breaches of the Banking Code of Practice.
The Banking Code of Compliance Committee (BCCC) has sanctioned the Bank of Queensland (BOQ) for what it alleges are “serious and systemic” breaches of the Banking Code of Practice.
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In an announcement released on Friday (17 January), the BCCC alleged the non-major bank and its subsidiary brands, BOQ Specialist and Virgin Money, had failed to stop or refund more than 2,500 instances of fees and interest being incorrectly charged to the estates of deceased customers.
The body that monitors and drives best practice compliance with the code said these incorrect charges amounted to a total of $158,854 in fees and interest to the estates, between 2019 and 2023.
As a result, the BCCC found BOQ in breach of its obligations as a signatory of the Banking Code of Practice, as it had failed to stop or refund the incorrectly charged fees and interest.
BOQ has been issued with a “naming sanction”, where details of its non-compliance are published on the BCCC’s website and in its annual report.
BCCC chair Ian Govey AM said the decision to apply such a sanction reflected the “severity and systematic nature of the compliance failings”.
“We expect banks to take swift and effective action to address non-compliance and prevent further harm to customers,” Govey said.
“BOQ’s deficiencies and inadequate response fell below our expectations.”
The committee also said breaches were “compounded” by delays from the non-major in identifying and addressing underlying concerns.
BOQ reportedly introduced some improvements in late 2021, according to the BCCC. However, the committee said it “failed to apply them consistently and address the underlying causes”.
“BOQ’s response to its breaches lacked urgency. It took far too long to implement effective measures to address the root causes and to prevent recurrence,” Govey said.
The BCCC noted the non-major bank had co-operated with the committee throughout the investigation and has since improved its internal processes.
A BOQ spokesperson also told The Adviser the lender had apologised and completed remediation for the impacted customers.
“In 2022, BOQ identified operational control weaknesses, made leadership changes and announced a strategic priority to build stronger foundations through uplifting its operational resilience, control frameworks and risk culture,” the spokesperson said.
“BOQ has made considerable progress over the last two years in strengthening risk and controls, risk culture and addressing root cause issues.”
The spokesperson said BOQ had disclosed potential breaches of its deceased estate obligations in the period 2019–23 due to inadequate systems and control, as part of its operation resilience uplift program.
“BOQ has worked transparently and cooperatively with the BCCC and commenced a remediation program in 2022,” the spokesperson said.
“The program to address root causes of the issues raised was completed in August 2024. All impacted customers have been fully remediated and our remediation program was closed in 2024.
“BOQ takes its Code obligations seriously and remains committed to ensuring the right outcomes for our customers.”
Govey also acknowledged BOQ’s improvements while reiterating the importance of ensuring processes worked to support compliance with the Banking Code.
“Banks must ensure their compliance frameworks are strong and appropriate for the complexity of their operations,” Govey said.
“This is vital for upholding the commitments in the Banking Code and minimising poor outcomes for customers.”
Obligations under the code
The Banking Code of Compliance was developed and is owned by the Australian Banking Association (ABA). It was first introduced in 1993 and there are 19 current subscribers to the code.
The code is periodically reviewed to “keep pace with industry changes and consumer and community expectations”.
And adherence to the code is monitored by the BCCC, which promotes best practice compliance.
These activities include examining banks’ practices, identifying current and emerging industry-wide problems, recommending improvements, sanctioning banks for compliance failures, and consulting stakeholders and the public.
In 2022, for instance, the BCCC sought feedback about how banks settled financial affairs in deceased estates.
At the time, BCCC CEO Prue Monument said: “Consumer feedback will give us insights into real customer experience and help us identify what banks are doing well and where there are areas for improvement when helping with deceased estates.”
[Related: Feedback sought on how banks meet deceased estates obligations]
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