Senators have released a damning report on banks’ treatment of rural businesses, alleging their uncompromising approach to lending is driving some farmers to consider suicide.
The shocking allegations, based on the first-hand accounts of farmers, and published just a week after the government announced a royal commission into banks’ misconduct, painted the picture of a system that was rigged against farmers.
A recurring theme of the select committee report was the late repayment of loans as a result of droughts or other natural factors out of the farmers’ control.
In case after case, banks were presented as uncompromising and callous towards their customers, insisting that they repay their loans on time regardless of circumstance, and when they didn’t, calling in receivers to manage the sale of the farm.
One farmer, named as Mrs Debbie Viney, alleged an unnamed representative of an unnamed bank had told her he would kill himself if he were in her position.
“Banks seem to think they have the right to tell you that if they were in my shoes they would commit suicide,” she said.
“I have that. You can’t have any better proof than that … Their words were that if they were in my boots they would [commit] suicide.”
Another witness, who opted to remain anonymous, claimed his bank’s behaviour was preventing him from sleeping, and causing his wife extreme anxiety.
“Do they think about what goes through my wife’s mind if I take a rifle to work to shoot a fox or put a sheep out of its misery. She is thinking and praying that I don’t do anything stupid in a moment of madness or frustration,” the witness said.
While the final report stressed that some of the claims were contested, the senators said the evidence showed “broader patterns” of “significant problems” in the way banks were behaving towards farmers and other primary producers.
“Although the committee accepts that some allegations are contested, the profound emotional toll that bank and receiver behaviour had on many primary production families cannot be disputed,” the report stated.
“Many farmers who spoke to the committee were often distressed, agitated and spoke of the trauma that their experiences with banks and in particular, receivers, had caused their families.”
The report argued that farmers should be treated differently from other businesses because of the extreme volatility of the industry.
One witness, consultant Andrew McLaughlin, argued farmers “should not be compared to other businesses” because they relied on “seasonal factors that are out of their control”.
“The average farmer has on average one in three years where they achieve to break even or make a profit that enables them to pay their creditors or reduce their debt level,” he said.
The report, put together by the Select Committee on Lending to Primary Production Customers, came just days after Prime Minister Malcolm Turnbull announced he was calling a royal commission into the banking sector.
Mr Turnbull’s decision, a spectacular policy backflip, came partly as a result of intense pressure from a group of Nationals MPs, who have long claimed banks are mistreating farmers and other small rural businesses.
The select committee’s damning report will put extra pressure on the government to include the issue in the full terms of reference of the upcoming royal commission.
Labor senator for Queensland Andrew Chisolm, one of the six senators on the select committee, told The New Daily the committee’s work had been an “insightful exercise that allowed a number of important issues to be put on the public record”.
But he said the “harrowing stories” presented by farmers across the country now needed to be heard in the more powerful and public arena of a royal commission.
A short draft terms of reference for the royal commission was released last week, revealing a broad remit for the commissioner, former High Court judge Kenneth Hayne.
A government source told The New Daily the full terms of reference would be released before Christmas, and would stay true to the breadth of the draft terms.
However, the source added the government was “very aware” of the seriousness of many of the farmers’ claims, adding the issue would be “front of mind” as the government drew up the terms of reference.
The report made 27 recommendations, many explicitly directed at the Australian Bankers Association (ABA), the peak body representing Australia’s banks.
A spokeswoman for the ABA said the banking industry supported a mandatory National Farm Debt Mediation scheme, arguing this would ensure farmers were “treated fairly”.
She added that the ABA was working on a new ‘code of banking practice’ that would give “more certainty to farmers in their loan arrangements”.
“For example, banks will be required to give farmers three months’ notice about decisions on rollover,” she said.
The spokeswoman added that the ABA had developed new guidelines for banks to promote “fairer and more transparent practices in the use of valuers, investigative accountants and receivers”.This article was published by http://thenewdaily.com.au/Author: James Fernyhough - Money Editor
Nicole Chalmer Tuesday, 10 September 2019 08:40 Comment Link
How successful was the Financial Ombudsman in resolving bank/farmer disputes before AFCA ? I have read that there were extremely low levels of complaints which was taken as proof of success of the service and good bank behaviour - but in fact reflected the total lack of confidence in the process by farmers so they had given up complaining.Report