The commission’s interim report, labelled as “frank and scathing” by Treasurer Josh Frydenberg, also detailed how the bank underpaid 81 customers for as long as five years on term deposits, later paying customers to rectify the error.

The commission said the bank itself identified five examples of conduct that fell below community standards and expectations.

The report found that from 2008-17, 62 loans made by Rural Bank – a subsidiary of Bendigo Bank – to Queensland farmers had become non-performing. 

Poor judgement, inadequate oversight and management of the loans, combined with external events like Cyclone Yasi-related flooding and severe drought, contributed to the loans under performing, the report found. 

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The then Managing Director of Bendigo and Adelaide Bank Mike Hirst told the commission in May that those managing the loans failed to visit and inspect livestock and properties and failed to detect financial distress of loanees. 

The report also referenced an example where a Bendigo Bank relationship manager gave a verbal approval to a loan when not authorised to do so, resulting in a declined loan, failed home purchase and forfeited deposit.

After the customer threatened legal action, the bank paid the customer the amount of the deposit, the report found. 

The commission also found the bank in 2016 charged more than 2000 customers higher fees than it should on some agricultural products before paying more than $160,000 to remedy the matter.

More broadly, the report detailed endemic overcharging by banks and charging for financial advice never provided.

In some cases people were charged for services long after their death, the commission found.

Justice Kenneth Hayne, who is heading the royal commission, blamed greed for the persistent misconduct by financial institutions.

“Selling became their focus of attention. Too often it became the sole focus of attention. Products and services multiplied. Banks searched for their ‘share of the customer’s wallet’,” he said.

Commissioner Hayne said when misconduct was revealed, little happened beyond an apology from the entity, a drawn out remediation program or an infringement notice, penalties from which “were immaterial for the large banks”.

Treasurer Josh Frydenberg said the interim report evidenced 3000 cases of unsolicited financial advice and vowed to take the action necessary to restore public faith in the sector.

That action would only come once the commission delivered its full report next year, he said.

“Much more often than not, the conduct now condemned was contrary to the law. This does raise the question - do new laws need to be created,” he said.

“Banks and other financial institutions have put profits before people. Greed has been the motive, as short-term profits have been pursued at the expense of basic standards of honesty.”

Prime Minister Scott Morrison this week released draft laws increasing penalties for financial crimes.

A spokesperson for Bendigo Bank said: “The Bendigo and Adelaide Bank Group has noted Commissioner Hayne’s interim report.  We are reviewing the report and will provide the Commissioner with our response as required.”

“A strong, innovative financial system is essential to a robust Australian economy, and operating with integrity and in line with community standards and expectations is essential to the future of financial services.

“We take the important role we play in the economy and the community seriously, and we welcome actions that put the interests of customers first, raise professional standards in the industry and deliver better outcomes for all Australians.”

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