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Victorian franchisees take legal action against Bank of Queensland

Bank of Queensland is being sued by two of its Victorian franchisees, who claim senior management forced them out of business by blocking loan requests, refusing customers and waging a campaign of harassment that included abusive tirades and ''inappropriate'' touching.

The allegations are made in two statements of claim lodged last month in the Supreme Court of Victoria. The Victorian legal action is the latest in a series of expensive legal battles between BOQ and the franchisees of its unique owner-manager branches.

Fairfax Media believes several other BOQ Victorian franchisees are considering joining the litigation against the bank, with owner-managers concerned head office wants to bring their branches back under corporate control in order to increase profits and possibly to make the bank more attractive to one of Australia's big four banks.

The Victorian franchisees taking the action, who ran the bank's Geelong West and Hawthorn branches, claim senior management had initially promised them they would be able to write $4 million of business a month.

One of the Geelong West franchisees, Heath McFadyen, claims to have written $4 million or more of business for 40 months. The Hawthorn franchisee, Shaun Huntington, claims to have written $4 million or more for 22 months.

Mr Huntington's claim states that he was nominated by senior management to be an inaugural member of the bank's national advisory committee and was used by BOQ as a mentor to other owner-managers.


Both Mr Huntington and Mr McFadyen claim the bank renewed their owner-manager agreements in early 2012, with many of the conditions remaining the same as their initial arrangements. However, the 2012 agreement included a clause allowing the bank to unilaterally reduce the owner-managers' income to zero.

The pair allege that soon after in 2012 the bank began to reduce their profitability and competitiveness in the marketplace by reducing trailing commissions, refusing certain clients and not approving loans.

Mr Huntington accuses BOQ chief executive Stuart Grimshaw of reneging on a March 2012 promise to attend a function he hosted for clients at Rockpool restaurant at Crown casino. He claims Mr Grimshaw's failure to attend caused him ''considerable embarrassment''.

Mr Huntington alleges that another senior BOQ executive ''stood over'' him in his office ''shouting abuse including foul language at him''. A formal complaint was made to BOQ about this incident but no action was taken, Mr Huntington said.

The bank is also accused of dishonouring Mr Huntington's overdraft arrangements without notice, causing delays in the payment of wages to staff at his Hawthorn branch.

A senior bank executive is also accused of telling other Victorian owner-managers that Mr Huntington had got himself into financial trouble by buying a new home and car.

Mr Huntington also alleges a senior bank executive repeatedly touched his wife ''inappropriately'' at the Hawthorn branch in December last year.

The bank served breach notices on Mr Huntington and Mr McFadyen. In response to this, both men have claimed the bank never provided appropriate training to allow them to comply with its requirements and audit standards.

Last year, Victorian Supreme Court judge Ross Robson lashed BOQ management for calling police to remove Mr McFadyen and his partner, Mark Ellis, from their Geelong West branch office.

Justice Robson said the decision to ''adopt self-help'' by involving police in a civil dispute was a ''very retrograde step''.

BOQ has assumed control of the Geelong West and Hawthorn branches. It is yet to file a response to the statement of claims, but is believed to be considering attempting to have one of the cases heard in Brisbane. The bank earlier this year declined to answer questions from Fairfax Media about the prospect of litigation in Victoria.

The NSW Supreme Court in February rejected a series of lawsuits lodged by former BOQ owner-managers in that state. The owner-managers had claimed bank executives had provided misleading information about profitability.

In an internal February memo about the legal battle with former owner-managers, BOQ's group executive for retail, Matt Baxby, wrote that the bank had acted ''in good faith and with integrity''.

''Though the market is rapidly changing and we have to as well, owner-managers are a fundamental part of our strategy … we now provide more focused support to owner-managers than at any other point in our history.''