Banking royal commission puts small businesses in the spotlight, as it happened
Westpac fought and won a case with the Financial Ombudsman Service that enabled it to evict an elderly pensioner with multiple serious medical conditions, with only a last minute deal preventing that outcome.
Look back on our blog for the day's developments.
Live updates
That's all folks!
By Michael Janda
Gagged farmers hope banking royal commission will expose misconduct
Westpac's assessment of guarantors
By Michael Janda
Hodge: "The banker will presumably be alive to any signs of vulnerability on the part of the parent?"
Welsh: "Yes, they should be."
Hodge: "All that that means is that the account manager and credit officer have to be satisfied that the guarantor will be good for it if Westpac wants to call on the guarantee?"Welsh: "That's how I read that, yes."Hodge: "And they don't need to be satisfied as to what financial position that would leave the guarantor in if the guarantee was called upon?"Welsh: "That's correct."
Westpac responds to Flanagan case study
By Michael Janda
"My review of the file shows we followed the process I would want the bank to follow."
Westpac initially refused life tenancy compromise
By Michael Janda
'Difficult to say no' for older parents when children ask for help
By Michael Janda
"People often want to put family first ... or they might feel some pressure to do what their child asks them to do in order to preserve the relationship. In those circumstances, my clients might find it difficult to say no to a financial arrangement that's being put forward to them by their son or their daughter."
Witness Carolyn Flanagan takes the stand
By Michael Janda
False start
By Michael Janda
'Overall big step forward'
By Michael Janda
Banks couldn't resist 'weasel words'
By Michael Janda
"I take exception to the language ... I think small business, reading that, would treat it as weasel words."
Banks rely too heavily on guarantors
By Michael Janda
"It was put to us by a number of people, and again we were unable to find real evidence for this, that banks were relying too heavily on the presence of a guarantor's assets and not doing sufficient homework on the underlying sustainability of the business loan. The argument was that the banks were happy because their risk was attended to by a mortgage over someone's house or some other kind of asset and were not being as diligent as they ought to be."
'Comparatively minor concessions to fairness' rejected by banks
By Michael Janda
"Most of the concessions that the code talks about are providing notice, providing information, providing access to external dispute resolution — these are things that our assessment of community expectations is simply around fairness. It's not tilting the balance of power dangerously away from the banks, so we didn't think the concessions were so enormous that the argument that this would be grossly unfair to banks was particularly compelling."
Review into banking code of practice
By Michael Janda
Commission won't examine 'ulterior motive' of CBA's Bankwest loan defaults
By Michael Janda
Businesses forced to walk away from banking disputes
By Michael Janda
- 1.Lack of a proper assessment of the viability of the business and its capacity to service the loan.
- 2.Concerns about business loans guaranteed by the family home, including by parents or other relatives of the business owner.
- 3.The process of rolling over business loans and oppressive conditions attached to the new loans.
- 4.Business loans placed in default or terminated for breaches of non-monetary conditions of the loans when the business is up to date with repayments.
- 5.Lack of adequate dispute resolution mechanisms: Many small business have to "walk away" from their dispute with the bank because they can't afford legal proceedings.
Small business borrowers 'rely on self-regulation by banks'
By Michael Janda
Small business and personal lending often cross over
By Michael Janda
Three key questions to be examined
By Michael Janda
- 1.What responsible lending obligations should apply to small business loans?
- 2.In what circumstances would a bank taking default action on a small business loan be unfair, unconscionable or fall below community standards?
- 3.How have the banks and regulators responded to calls for fairer dealing with small business customers?
Farm 'fire sales' will not feature during this hearing
By Michael Janda
Senior counsel assisting the commission Michael Hodge QC has said right at the outset that this fortnight of hearings will not include farm loans. He said there will be a separate set of hearings dedicated to that issue.
The Nationals senators who pushed within the Government to have a banking royal commission are most concerned about the many instances they've heard about where farmers have been held in default of their loans despite keeping up with repayments.
Many of these farmers claim to have had their farm sold at massive discounts to its true value by the bank, resulting in huge losses and sometimes personal bankruptcy.
The ABC's Marty McCarthy has done a great story examining the issue:
Gagged farmers hope banking royal commission will expose misconduct
Small business in the spotlight
By Michael Janda
The banking and financial services royal commission is turning its attention to small and medium-sized businesses and their (presumably) negative interactions with the banks.
We'll have an intro from counsel assisting the commission, then hear from a case study later in the day, with Westpac the first bank scheduled to take the stand in this block of hearings.
Follow this live blog and @danziffer, @mikejanda, @stephchalm and @peter_f_ryan on Twitter #BankingRC to stay up to date with the key evidence.