Below is reproduced a letter I sent to James Shipton, Chair of ASIC since February 2018. I have not yet received a reply, unless it has been diverted in the post. Evan Jones.
Australian Securities and Investments Commission
GPO Box 9827
Brisbane QLD 4001
3 April 2019
Re: Unconscionable conduct provisions
Dear James Shipton
I write to you regarding ASIC’s handling (or not) of its responsibilities for unconscionable conduct of banks against borrowers under s12C of the ASIC Act – in particular, s12CB and s12CC with respect to bank lenders and small business and family farmer borrowers.
I have written to previous ASIC Chairs on this matter – to Jeffrey Lucy, 6 May 2004, to Tony D’Aloisio, 3 December 2010, and to Greg Medcraft, 17 June 2011. I also wrote to Deputy Chair Jeremy Cooper, 26 March 2008.
The gist of my correspondence related to the movement of responsibility for unconscionable conduct in financial services from the ACCC, effective March 2002, replicating s51AC of the Trade Practices Act. My concern is that nothing has been done with this enhanced power, indeed enhanced obligation.
I received letters in reply to my correspondence – from Lucy (via Greg Tanzer, 15 June 2004), Cooper (9 April 2008), D’Aloisio (24 January 2011) and Medcraft (8 July 2011). All conveyed to me the claim that everything was in perfect working order – nothing to see here.
The background. In an exchange originating from one of my academic publications, I heard from a bank victim in 2000. After writing on our banking sector and its victimisation of small business and family farmer customers, I heard from more victims, and so it has been to this day nineteen years later. I have thus a rare perspective on the nature and scale of the beast.
Bank victims contact me, an outsider with no standing and with no influence save for ‘the power of the pen’, after they have been repelled by the entire regulatory/mediation apparatus and ignored by their political representatives.
In that capacity, I am in possession of numerous letters from ASIC to small business complainants who have sought assistance in combatting the asymmetric dealings with their bank lenders. I note that bank victim advocate Denise Brailey also claims to have in her possession comparable correspondence.
These letters uniformly tell victims to go away – that ASIC can be of no assistance. The letters utilise various defences, sometimes in (contradictory) combination – your claim has no merit, ASIC has no relevant powers to act, ASIC only investigates matters of systemic significance, etc. ASIC advises complainant to hire a lawyer, a route that ASIC personnel must know to be impossible or fruitless.
Such letters not merely misrepresent ASIC’s powers and responsibilities post 2002 but are also generally contemptible in their disdain for the complainant and their indifference to the substance of the complainant’s experience.
In this context, I proverbially almost fell off my chair when present at the Joint Committee ‘Impairment of Customer Loans’ hearing in Sydney, 23 November 2015. At that hearing, senior ASIC personnel told a different story.
ASIC hadn’t pursued unconscionable conduct cases re SMEs, etc., because it was in the ‘too hard’ basket.
Rather than replicate the substance of this hearing exchange and my interpretation of its significance, I append my October 2018 submission to Treasury’s ASIC Enforcement Review, Reforms to strengthen penalties for corporate and financial sector misconduct – Draft Legislation.
In short, for these long years, years in which bank predation against SMEs/farmers continued apace for which the sector knew it had carte blanche for its actions, ASIC failed to carry out its legislated obligations.
Let us confront that a bank lender, by virtue of its asymmetric total control of the contractual relationship, can default at will a SME/farmer borrower. Predation is as easy as falling off a log. Nobody in authority (nor the judiciary itself in its perennial pro-bank judgments) has cared to inquire into the nature of the bank lender – SME/farmer borrower relationship.
The situation was worse than if no such legislation existed, because successive governments continued to claim that the regulatory apparatus had all the enforcement arms that it needed. The victims knew otherwise.
The problem has been compounded by the fact that ASIC had formal oversight for the operations of FOS, yet it apparently remained oblivious to FOS personnel’s ongoing complicity with the banks against which customers brought their complaints to FOS.
It is in this impasse that SME/farmer bank victims have become nonplussed, depressed (sometimes suicidal), hysterical, furious, apoplectic that nobody in authority wants to know about their plight. Meanwhile, by virtue of bank plunder of their assets, many of them live precariously, dependent on Centrelink or the pension.
This state of play remains ongoing. The Royal Commission turned out to be theatre, pilloring some token baddies (AMP, IOOF), and honing in on the ‘wealth management’ divisions of the banks while studiously avoiding the banks’ core banking activities – worse, selectively legitimising the corrupt takedown by the CBA of hundreds of Bankwest commercial borrowers.
The very existence of the current Senate Legal & Constitutional Committee inquiry into access to justice, and the victim submissions (and bank responses to such submissions), highlights that nothing has changed post-Royal Commission. My personal feedback from victims, facing hardball tactics by their banks (behind the façade of public mea culpas) reinforces that evaluation.
The media has made reference to ASIC’s intentions towards a more assertive pursuit of bank misdemeanours in the ‘wealth management’ arena. As per usual, there is no coverage of ongoing issues within the SME/farmer domain.
I would hope that your new administration will also adopt a more assertive stance in this latter domain.
The alternative is to hand back unconscionable conduct in financial services to ACCC.
The current absence of regulatory support for SME/farmer borrowers remains an intolerable burden on those beleaguered sectors that conventional propaganda claims to be the economic and social backbone of the nation.
(Dr) Evan Jones
Jones to Lucy, May 2004
Jones to D’Aloisio, December 2010.
Jones to Medcraft, June 2011.
Jones submission to Treasury’s ASIC Enforcement Review, October 2018.