Commonwealth Bank develops program to assist personal loan borrowers in remote communities
19 January 2006
The Commonwealth Bank has today reached agreement with the Australian Securities & Investments Commission (ASIC) and the South Australian Office of Consumer and Business Affairs (OCBA) regarding revised arrangements for the continued provision of lending to remote communities.
The development of the revised arrangements follows an investigation by ASIC and OCBA into some deficiencies in the Bank's personal lending practices and processes in relation to third party loan introducers to borrowers in remote communities in Queensland, Northern Territory and South Australia. The new program includes a remedial plan of action for approximately 400 borrowers affected and new lending processes for these areas have been developed by the Bank.
The Bank expressed its concern that these deficiencies occurred and apologises to any borrowers affected. The Bank has emphasised to ASIC that the breaches were unintentional. ASIC has acknowledged the constructive approach taken by the Bank in addressing the issues and in developing new lending processes.
Personal loans approved in remote areas have been reviewed by the Bank and individual contact will be sought with borrowers where concern has been identified. In these instances, a fresh assessment of the borrower’s ability to service the debt will be undertaken on a case-by-case basis and arrangements put in place to assist those customers.
The Bank recognises the importance of continuing to provide credit to remote communities and giving these communities access to the same opportunities as customers in metropolitan areas as far as practicable. Therefore, the Bank has developed a simple, fair and effective lending approach for remote areas and social welfare recipients. The new approach will consider serviceability requirements, family and other commitments and includes maximum loan terms.
Both ASIC and the Commonwealth Bank understand the importance of assisting those in remote communities better understand the financial world in which they participate. For that reason, ASIC, OCBA and the Bank propose to join together to provide a dedicated counsellor for remote communities for which the Bank will provide funding. More details on the new service will be advised as the position and role is developed.
The Bank will continue to work closely with ASIC in this matter, providing regular updates to ASIC on progress and the effectiveness of the new processes.
For further information, please contact:
General Manager, Media
Telephone (02) 9378 2663
0414 789 649