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"All the banks do it!"

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This email address is being protected from spambots. You need JavaScript enabled to view it." style="color: blue; text-decoration: underline;">TONY RAGGATT   (Townsville Bulletin)

A BESIEGED Bank of Queensland yesterday 
sought to defend its contentious practice of 
offering low-document loans to aged pensioners in the Storm Financial fiasco.

While the bank has admitted it did not check people's incomes when lending millions of dollars to Storm investors, it claimed yesterday that all banks followed the same practice of not verifying customers' income details when providing so-called low-doc loans.

"That's why they are low-doc loans," a spokesman said.

"All the banks do it."

One Townsville aged pensioner, Helen Chambers, 70, also a client of Storm, has discovered her income was incorrectly listed in loan documents as $104,000 a month.

In a May 29 letter responding to Mrs Chambers and others, the Bank of Queensland states it is entitled to expect that customers signing the documents have checked all the information provided and that it is correct.

"The bank relied on the information provided by you (as evidenced by your signature) as to your income in making our assessment of your serviceability and in approving your loan," it says.

Storm arranged the loan documents for clients, had them attend the Storm office in Sturt St to sign them and then lodged them with the Bank of Queensland's North Ward branch.

The clients say they never had contact with the bank.

The bank has denied its North Ward part-owner-manager Matthew Buchanan operated out of the Storm office but did confirm he would visit the office as he would any other financial advisory firm.

A spokesman for bank regulator the Australian Prudential Regulation Authority confirmed its prudential practice guide did not necessarily apply to non-standard eligible mortgages such as low-doc loans.

For standard mortgages, the guide states banks have to assess and verify the ability of the borrower to meet repayment obligations and, `in general', require them to assess and verify all material income sources and employment details.

The spokesman suggested APRA imposed higher minimum capital requirements on banks for non-standard mortgages to protect depositors from the higher risks associated with the loans.

There are claims Storm and the Bank of Queensland North Ward branch preyed on investors, deriving high fees and commissions from relaxed lending practices.

Townsville economist Carey Ramm said the bank's behaviour raised questions as to whether it was fit and proper to hold a banking licence.

Queensland Liberal Senator Ian Macdonald said the allegations needed to be investigated.

"The bank has an underlying duty of care to use some independent thought on whether the information given to them could possibly be correct," he said.

"Where aged pensioners are listed as having incomes of $200,000 a year, the bank must have a duty to say, this can't possibly be supported by other information we have.

"I would think that as this matter proceeds in the parliamentary inquiry, the ASIC (Australian Securities and Investments Commission) inquiry and in court where actions will be taken on behalf of consumers, these issues will be fully investigated and I would think Bank of Queensland has a lot of explaining to do."

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  • doyla66
    doyla66 Tuesday, 04 September 2012

    I have tried to look hard for a retraction statement from the spokesperson of BOQ or from BOQ in relation to what they announced with low docs and all banks doing it. Have not found one yet. Maybe trying to do one now - three years later - maybe be a bit hard for them to do.
    Also noted that I could not find an article from other lenders denying BOQ's allegations of all banks doing it.

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