Senate committee blasts banks
The Australian May 6, 2016 12:00am
Richard Gluyas
A powerful parliamentary committee has issued a damning report on the nation’s banks, blaming a “compulsion to deliver ever-increasing returns to shareholders” for their poor treatment of small business and commercial customers who are in financial difficulty.
Liberal Party senator David Fawcett, chair of the parliamentary joint committee on corporations and financial services, said the committee had seen a lot of evidence of unconscionable conduct.
“Evidence showed that the actions of various stakeholders in this process, particularly the banks, have unnecessarily cost many small business owners not just their livelihoods but in many cases their homes, health and the breakdown of relationships,” Senator Fawcett said.
The committee’s recommendations were in line with the policy positions of the main political parties.
The majority report tabled by Senator Fawcett called for reforms to help address the “almost complete asymmetry of power” in the relationship between lender and borrower.
However, in line with Coalition policy, it stopped short of calling for a banking royal commission.
A dissenting report from Labor committee members backed Bill Shorten’s royal-commission policy, saying it was not possible to rule out systemic illegal or unethical behaviour.
“Labor members of the committee believe there is more evidence of banking misconduct that needs to be investigated,” it said. The committee’s 150-page report was tabled after an inquiry lasting 11 months that considered more than 11,000 pages of evidence and 195 submissions.
The inquiry looked closely at Commonwealth Bank’s controversial acquisition of Bankwest at the height of the financial crisis, and the bank’s treatment of a group of deeply aggrieved customers.
Despite allegations that CBA defaulted customers so it could benefit from a clawback mechanism in the Bankwest purchase contract, the committee made no adverse findings that loans were deliberately impaired.
However, CBA’s denial of any issues was contrasted with ANZ Bank’s voluntary compensation of some customers inherited from its Landmark purchase.