BENDIGO and Adelaide Bank has been named for "serious and systemic breaches" of the 2013 Code of Banking Practice.
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It marks the first time the Banking Code Compliance Committee has named a bank for non-compliance with the code, and the second time in 12 years that a bank has received such a sanction.
Bendigo and Adelaide Bank has been named on the Banking Code Compliance Committee's website and annual report, which was released on Wednesday.
The breaches occurred in the four years from February 2015, in the bank's Great Southern Loans business unit.
Eighty one per cent of the non-compliance issues relate to the 2015 and 2016 calendar years, according to the bank.
The committee said the breaches included "non-compliance with a number of the 2013 code's important consumer protections, such as debt collection practices and the treatment of customers experiencing financial difficulty."
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Bendigo and Adelaide Bank said it had taken swift and decisive action to remedy the breaches - something the committee acknowledged.
Bendigo and Adelaide Bank managing director Marnie Baker said the bank had addressed the operational issues to prevent this from happening again and had established a remediation program to provide to payments to affected customers.
"We regret our actions and sincerely apologise for any negative impacts these breaches have caused for our customers," Ms Baker said.
"We fell short of our own expectations and that of our customers and the community.
"These actions do not reflect who we are and what we stand for. We always strive to put our customers and communities first and these historic issues are not acceptable."
Story continues below notice of sanction
She acknowledged that the Great Southern collections team was inadequately resourced and the bank's processes and systems for those staff and Great Southern customers were insufficient.
"Because of this, we made mistakes in how we communicated with and responded to some of these customers," Ms Baker said.
The Great Southern collections team was established and operated separately from the bank's broader operations.
One of the ways in which the bank has addressed the operational issues associated with the non-compliance has been to integrate the Great Southern team into the team responding to financial difficulty assistance.
The bank also said it had strengthened oversight processes for Great Southern collections and financial difficulty activities.
Call recording systems, complaints management, training and processes had also been addressed.
"We are confident of the corrective actions we have taken and the ongoing remediation program, along with the Banking Code Compliance Committee's report, concludes the matter," Ms Baker said.
She said the bank would continue to work closely with the committee.
"We remain committed to complying with all required regulations, standards and guidelines whilst continuing to prioritise the interests of our customers and their communities," Ms Baker said.
The bank made a provision of $1 million for remediation for matters including the non-compliance, which was disclosed in its results for the past financial year.
It estimates there are fewer than 450 accounts that might require remediation or goodwill payments.
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Great Southern customers that sought financial hardship in 2015 were potentially affected.
"To date, 15 percent of the accounts independently reviewed have been assessed as eligible to receive remediation or a goodwill payment, with the majority comprising goodwill payments which recognises any non-financial adverse impact on the customer," the bank said.
The Great Southern loan portfolio was worth $31.4 million at the close of the 2020 financial year.
The bank said the historic breaches did not impact Great Southern borrowers' obligations. Nor did they affect the bank's legal rights on loans that had previously been repaid or recovered by the bank.
"This has been confirmed through extensive legal processes, including via the Victorian Supreme Court," the bank said in a statement.
The Supreme Court became involved after investors brought a class action against the Bendigo and Adelaide Bank in 2010. It was resolved in December 2014 by means of a settlement.
