The Australian Securities and Investments Commission (ASIC) has ordered the Bank of Queensland to refund a total of $12 million to some 6,000 customers following the over computation of interest on home loans due to a system error.
In response, the Bank of Queensland has started collaboration work with an independent expert to review and expedite the remediation process as well as inspect the bank's systems.
It was in October 2012 when the Bank of Queensland noticed the honest discrepancy. It immediately reported to ASIC its discovery.
Costly System Error, ASIC Orders Bank of Queensland to Refund Customers $12M
The Bank of Queensland is currently identifying all the involved customers as well as the exact amount to refund them.
"Any money in the offset account reduces the amount of interest payable on the linked home loan. For example, if the outstanding balance on the home loan is $100,000 and there are savings of $20,000 in the offset account, then interest is only payable on the difference ($80,000)," ASIC said in a statement.
The overcharging occurred due to a system failure to link the Mortgage Offset Accounts, basically a savings account linked to a person's home loan account.
"In this case, BOQ failed to link some offset accounts to home loan accounts, which meant that money held in those offset accounts did not reduce the interest payable on the home loan accounts. As a result, borrowers paid more in interest than they should have done," ASIC noted.
Affected Bank of Queensland customers will be notified by mail. Interest will be repaid in full and adjustments will be backdated.
To report problems or to leave feedback about this article, e-mail:
To contact the editor, e-mail:
This article is copyrighted by IBTimes.com.au, the business news leader