BEN 0.58% $6.86 bendigo and adelaide bank limited

bedigo bank media release re great southern

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    December 22, 2009
    Investors prepare for significant Great Southern vote
    Key points

    Grower investors vote on Gunns proposal tomorrow

    Prospects for M+K class action against Timbercorp Finance described as gloomy

    ASIC dismisses M+K complaint against Bendigo and Adelaide Bank

    Debt collection process will continue with Great Southern grower investors
    Grower investors in various Great Southern Managed Investment Schemes (MIS) will vote on a proposal from Gunns Limited to take over the schemes at a meeting to be held tomorrow in Sydney.
    The meeting comes at a time that a judge in the Supreme Court of Victoria indicated that the prospects of the claims made against Timbercorp Finance Pty Ltd in a class action launched by law firm Macpherson + Kelley (M+K) were gloomy; and as ASIC has cleared Bendigo and Adelaide Bank of any wrongdoing in its debt collection program involving grower investors in Great Southern MIS.
    These developments will serve as a watershed for grower investors. In particular, those who have followed class action lawyers advice to cease paying their loans, may need to reassess their decision.
    BEN Managing Director Mike Hirst said growers should ensure any advice they received took into account their full rights and obligations.
    We feel vindicated that the complaint by M+K to ASIC was dismissed, and note with interest that M+Ks prospects, based on their court documents against Timbercorp Finance are, in the words of the judge, gloomy, Mr Hirst said.
    Given BEN's position as a third party financier outside the Great Southern Group, the difficulties faced by M+K in the Timbercorp class action may well be magnified in any class action that M+K may seek to bring against the Bank.
    We remain concerned that M+K is not adequately advising its clients as to the risks and potential consequences of its recommended course and that this in turn will compound financial penalties for those clients, Mr Hirst said.
    Under debt collection guidelines banks are required to correspond with customers via their lawyers once the bank has been notified that the customer has retained legal representation.
    We take our responsibilities under debt collection guidelines very seriously, and look to deal with all borrowers in a manner that is consistent with both the letter and the spirit of the law, Mr Hirst said.
    Unfortunately in the case of M+K, our correspondence to defaulting customers sent via M+K was tampered with, in that it had details removed and was issued to customers to whom it was not directed (including those not in arrears), with the result that the position of the bank was misrepresented.
    This also meant M+K was withholding vital information from its clients about their loan balances, loan arrears and interest that was being applied.
    Once we became aware of M+Ks behaviour, we recommenced communication directly with our customers and our decision to do so has since been vindicated by ASIC. We will continue this course of action for customers represented by M+K, Mr Hirst said.
    BEN reminds customers that loans to MIS investors are full recourse loans. A borrowers obligation to repay their loan is not affected by the receivership or administration of any company in the Great Southern Group. ends
    Will Rayner
    Head of Investor Relations and Corporate Affairs
    08 8220 7764
    0437 794 366
    [email protected]
    Background information
    ASIC response to M+K debt collection complaint

    ASIC has dismissed a complaint lodged by Macpherson + Kelley (M+K) in relation to Bendigo and Adelaide Bank Limited's debt collection conduct.

    M+K is a law firm that represents a group of investor growers in Great Southern MIS. M+K lodged a complaint with ASIC about the Bank's debt collection conduct in relation to investor growers who have used loans with the Bank to finance their investments in Great Southern MIS. The Bank responded in writing to M+K's complaint and discussed the matter with ASIC.

    In a letter dated 21 December 2009, ASIC informed the Bank that it does not believe it has grounds to intervene in the recovery process currently being pursued by the Bank. ASIC also informed the Bank that it has communicated its view to M+K.
    Timbercorp class action Implications

    M+K also represents a group of investor growers in Timbercorp MIS. One of those investor growers (the lead plaintiff) has applied for leave to proceed with a class action proceeding against Timbercorp Securities Limited (the responsible entity of Timbercorp MIS), Timbercorp Finance Pty Ltd (a company that provided finance to investors growers in Timbercorp MIS) and others. Amongst other things, the lead plaintiff alleges that Timbercorp Finance is liable as an accessory for alleged wrongful conduct of Timbercorp Securities.

    At a directions hearing held on 15 December in the Supreme Court of Victoria, Justice Judd said that he was not currently satisfied that the lead plaintiff had shown any basis for the alleged liability of Timbercorp Finance as an accessory. His Honour said that the prospects for the lead plaintiff's application for leave to proceed against Timbercorp Finance were "gloomy" in their current form. Justice Judd has given M+K the opportunity to reformulate the lead plaintiff's application. The matter has been adjourned until 18 February 2010.

    M+K has publicly stated that it is seeking to launch a Great Southern related class action, but has not done so. Given the Bank's position as a third party financier outside the Great Southern Group, the difficulties faced by M+K in the Timbercorp class action may well be magnified in any class action that M+K may seek to bring against the Bank.
    Great Southern MIS

    Voluntary Administrators were appointed to Great Southern Managers Australia Limited (GSMAL), the responsible entity for the Great Southern MIS, on 18 May 2009. Receivers and Managers were appointed to GSMAL two days later on behalf of secured creditors.

    The Receivers invited expressions of interest from parties to be appointed as a replacement responsible entity for the various schemes.

    Bendigo and Adelaide Bank has proactively engaged with the Receivers, Administrators, and many other parties, to assist in maintaining a future for the schemes. The primary objective of the Bank was to retain value for growers in the schemes.
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