SYDNEY (Reuters) - Australia’s Suncorp Group Ltd (SUN.AX) told a powerful inquiry into financial sector misconduct on Friday that it had extended loans negligently in some cases, but that it acted fairly in pursuing customers struggling to make repayments.
The country’s sixth-largest bank by market value made the comments at the quasi-judicial Royal Commission which, under halfway into a year-long inquiry, has uncovered widespread malfeasance by Australia’s biggest lenders including fraud.
The Commission is due to report its findings in September and can recommend criminal charges and legislative change.
In its first appearance at the inquiry, Suncorp said it showed “good intent” when pursuing repayment from unemployed Jennifer Low for five loans to her husband, who died in a 2015 workplace accident. Head of banking David Carter said Suncorp had grounds to demand immediate repayment, but opted not to.
Her son, Rien Low, told the inquiry the bank had shown no compassion. Neither family member knew of the loans, and the woman, widowed at 62, had to sell her house to repay four of the five debts.
The family took the case to the Financial Ombudsman Service (FOS) which found Suncorp extended the fifth loan without checking the loan’s purpose or regard to whether the customer could repay, the inquiry heard.
Suncorp accepted the finding, but nevertheless requested the balance of over A$200,000 ($151,480) be paid within six months. It eventually agreed to a lengthier repayment period, with the first five years interest free.
“The impact we may have had has not always been right and perhaps some of our communication could have been better,” said Suncorp’s head of banking, David Carter. “But when I look at the way in which it (the widow’s case) has been approached, I see good intention.”
When asked by the barrister assisting the inquiry, Rowena Orr, why the widow was not allowed to repay the balance over a longer period of time without interest, Carter said repayment would have taken 17 years and that the option was unreasonable.
“I want to put to you that applicants may not proceed with applications to FOS if they realize that this is what success looks like,” said Orr. “You saying you now have six to 12 months to pay the entirety of the loan off even though it was lent irresponsibly to you?”
“I accept that,” Carter said.
Reporting by Paulina Duran; Editing by Christopher Cushing