A WESTBURY man whose farming business was destroyed by ANZ’s unethical practices says it is vital regulators are given the power to prosecute bankers found to be in breach of the banking code of practice.
Michael Hirst gave evidence at the banking royal commission in June, detailing how ANZ offered to increase his loans in 2011 but then dropped the valuation of his property by 40 per cent the same year, forcing them to sell.
The bank also raised the interest rate of their accounts when they were known to be in financial stress following the collapse of the managed investment scheme industry, including Gunns.
The banking royal commission recommended mediation as soon as loans become distressed, land valuations independent of lenders, and the appointment of receivers or administrators as only a last resort.
Coverage of the banking royal commission:
Mr Hirst said it was pleasing to see changes proposed for farm lending, but prosecution for malpractice was crucial.
“Making the code of conduct legally enforceable is a fantastic element. That was a big problem for us – the ANZ broke just about every facet of the code of conduct, but it wasn’t legally enforceable,” he said.
“In the past, APRA and ASIC haven’t had any strength in prosecuting these guys. The legal system hasn’t backed them up.
“If the legal system is changed to back up these regulators, then they will be able to take on this white collar crime.
“These banks have taken billions of dollars illegally, but you don’t see too many bankers behind bars. If anyone else stole $10,000 from a small business they’d go to jail.”
The extent of damage caused to Mr Hirst’s credit history as a result of the actions of ANZ meant they have been unable to recover financially, even eight years down the track.
His case was among the most serious example of misconduct against farming businesses, and allowed him to take the stand during the royal commission – an opportunity not extended to many others.
Mr Hirst said they all deserved to have their voices heard.
“That’s really lacking in the recommendations. All of these submissions are the ones that helped the royal commission go head,” he said.
“I think the financial sector would learn a lot from sitting in the room.”
Bank of us: ‘Step in the right direction’ for banking industry
Tasmanian customer-owned Bank of us is confident the recommendations from the royal commission will strengthen the accountability and effectiveness of regulators, but questions remain around the impact on mortgage brokers.
Bank of us chief executive officer Paul Ranson said there were “radical changes” recommended for the way mortgage brokers were remunerated.
“The broker network is an important channel for smaller lenders,” he said.
“If borrowers, not lenders, are to pay a fee for arranging a loan it is important that this does not adversely impact competition in the home lending market.”
The Customer Owned Banking Association found that during the royal commission, about 8 per cent of customers had changed their banks – particularly to smaller players.
Mr Ranson said their competitors needed to shift “from a culture that places shareholders first, to one that always has the customers’ best interests at the fore”.
He said Bank of us had experienced growth as a result of the royal commission.
“We have enjoyed excellent growth in the past 14 months since becoming a bank and, anecdotally, many of our new customers have come to us from the Big 4,” Mr Ranson said.