The Federal Court has held that a range of small business loan contracts from Delphi Bank and Rural Bank are "unfair".
These are both divisions of Bendigo and Adelaide Bank.
ASIC on Friday said its investigation "revealed that some of the unfair terms gave the bank broad discretion to unilaterally vary the terms and conditions of the contracts without giving the borrower advance notice, or an opportunity to exit the contract without penalty."
The bank did not assertively contest the matter in court, making joint submissions with ASIC on many matters.
Bendigo did take issue over details such as ASIC's complaint that "the terms are not transparent ... because they are not expressed in reasonably plain language or presented clearly."
ASIC had told the court that "the terms are drafted in legal language and are not by their font or position in the contract drawn to the customer’s attention (as distinct from other terms)."
The small business loan contracts in dispute dated from July 2015 in the case of Delphi, and November 2016 in the case of Rural Bank.
Justice Jacqueline Gleeson noted that as of June 2019, the bank had:
- 94 active facilities which incorporated the Delphi Conditions and had a contract value of less than $300,000;
- 202 facilities which incorporated the Delphi Conditions and had a contract value of less than $1 million;
- 10,485 facilities which incorporated the Rural Conditions and had a contract value of less than $300,000; and
- 5,044 active facilities which incorporated the Rural Conditions and had a contract value of less than $1 million.
Bendigo, ASIC said, will give an undertaking to the Court "not to use, or rely upon, any of the impugned terms in a manner that is unfair, or causes any customers to suffer loss or damage."
Justice Gleeson also made clear that "ASIC does not allege that the bank has relied upon any of the impugned terms in a manner that is unfair, or that has caused any customers to suffer loss or damage."