Banking royal commission: Senators put heat on receivers

The Australian 12:00am June 29, 2018

Michael Roddan

There is mounting pressure to expand the banking royal commission — or launch a further inquiry — to examine receivers appointed to conduct fire sales of the farmland and livestock of distressed agricultural borrowers, after a series of senators slammed the conduct revealed in the latest hearings.

On Wednesday night, a number of senators agreed that further investigation of external administrators in the financial sector was needed, after Katter Australian Party senator Fraser Anning raised concerns the royal commission was suffering from “issues in relation to time, funding and lack of political will”.

Yesterday the Senate passed a Greens motion sponsored by crossbench senators Fraser Anning, Derryn Hinch, David Leyonhjelm, Brian Burston, Rex Patrick and Peter Georgiou calling for at least a one-year extension of the royal commission. Tasmanian senator Peter-Whish Wilson said the motion sent “a clear message to the government to get on and give the extension of time to the commission right now”.

The royal commission has been under pressure to examine the role of receivers in agricultural lending, even though the inquiry’s terms of reference exclude any investigation of administrators, amid revelations that repossessed farms have been sold at below market value, pushing farmers further into debt.

Nationals senator John Williams has urged the royal commission to use this round of hearings to probe administrators, while the Rural Financial Counselling Service’s Chris Wheatcroft called for the actions of receivers to be examined in a roundabout way, via the conduct of banks in appointing them.

“The terms of reference need to be expanded to include the behaviour of receivers and their agents,” Mr Anning said on Wednesday night. “The issue of receivers’ behaviour has been identified as a source of grave concern and has been linked to a wave of suicides.”

Labor senator Chris Ketter said it was important not to make a running commentary on the progress of the royal commission and to allow the inquiry to carry out its work. But Mr Ketter said the role of external administrators when dealing with distressed rural borrowers was “an issue that warrants further scrutiny into the future”.

“There are stories about rural properties being sold for half their original worth in times of drought,” Mr Ketter said. “I know that I expressed some concerns about the behaviour of valuers, and I am concerned about the inherent conflict of interest that exists with the profession of valuers and the problem with major banks having panels of valuers and the inevitable conflicts that occur as a result of that.

“The terms of reference are not those which we probably would have supported. But let’s just get on with the issue,” Mr Ketter said. Nationals senator Barry O’Sullivan, whose private member’s bill for a commission of inquiry into the banks triggered the government’s establishment of the royal commission, said he was “inclined to agree that the terms of reference could have been broader in some categories”.

On Wednesday, commissioner Kenneth Hayne said he was “struck” by a case where a property was sold for almost $600,000 below a recent valuation.

Liberal senator Ian Macdonald said the government had established a “sensible, well-resourced and targeted royal commission”.

“The government will be watching closely the recommendations of the royal commission and, as required, it will be taking legislative or other action that might be needed and recommended,” Mr Macdonald said.

Small business ombudsman Kate Carnell earlier this month said the royal commission should examine the relationship between bankers and receivers.