Banking royal commission: Bank of Queensland accused of almost doubling borrowers’ repayments

A WOMAN who borrowed $280,000 to buy two Wendy’s ice cream franchises defaulted immediately after her bank almost doubled the repayment amount it first proposed, the royal commission has heard.

Bank of Queensland is under scrutiny in the latest round of the banking royal commission.

BANK of Queensland acted inappropriately when it offered a conditional loan to small businesswoman Suzanne Riches, the royal commission heard today.

BoQ head of business banking Douglas Snell said there had been a serious failure in the assessment and process of Ms Riches’ loan application, which included the miscalculation of monthly repayments.

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A loan was approved conditionally, with monthly repayments of $4420, but the repayments were later increased to $8696, the commission heard.

Mr Snell said there had been “maladministration” involving the loan application and letter of offer.

Suzanne Riches borrowed $280,000 from Bank of Queensland to buy two Wendy’s franchises. Picture: Aaron Francis.

Ms Riches, a primary teacher who was borrowing $280,000 to buy two Wendy’s ice cream franchises, was ultimately never able to make a full monthly repayment and the loan was immediately in default.

Internal BoQ documents showed the dispute with Ms Riches should have been resolved by reducing the loan debt by $56,000, reimbursing interest and legal fees and allowing the balance of the loan to be repaid without fees and interest.

However, Mr Snell confirmed the bank never made that offer to Ms Riches.

BoQ head of business banking Douglas Snell said the nine-month delay in resolving a dispute with Ms Riches was unfair.

Bank of Queensland chief Jon Sutton. Picture: Peter Wallis

The commission was shown correspondence in which the BoQ tried to negotiate and reduce the amount of compensation recommended by the Financial Ombudsman Service to be paid to Ms Riches.

“My personal belief is the strategy was not fair and reasonable,” Mr Snell told the commission.

Evidence at the royal commission today also focused on the salary and commission arrangements within the BoQ.

Unlike most banks, BOQ also operates a franchise bank branch system where its branch owners do not receive a salary but are paid commission based on the business they generate.

Staff within these franchise branches are also not paid a salary by the BOQ but receive their income based on arrangements made with the branch owner, including incentives and commission.