Australian farmers who have been foreclosed on hope the next round of banking royal commission hearings will expose the tactics of big banks they claim put them out of business.
Their plight was the inspiration for some National Party MPs such as George Christensen to call for a commission of inquiry, which ultimately forced the major banks and Prime Minister Malcolm Turnbull into agreeing to a royal commission.
"There was a great outcry from a number of farmers in north and central Queensland, and it was their stories and victimisation that forced me and other people to take a stance on this," Mr Christensen said.
In the wake of the global financial crisis, major banks such as ANZ and the Commonwealth Bank snapped up struggling lenders Landmark and Bankwest respectively, taking on their customers in the process.
But the banks' attempts to restructure many of the loans led to widespread foreclosures in parts of the country, and farmers and other small businesses have long accused banks of suddenly calling in loans despite repayments never being missed.
Some farmers have told the ABC their foreclosed properties were sold off at fire sale prices, leaving many of them homeless and with huge debts.
"There are a lot of farmers out there who have been through terrible ordeals who are too frightened to speak out, as they are bound by confidentiality," said a farmer, who asked the ABC to withhold her identity.
"That is why we're hoping the royal commission can get to the bottom of this."
Major banks have previously said customers would be free to give evidence at the royal commission, although that privilege does not extend to them talking to media.
In the opening address of the third-round hearings, which began on Monday, counsel assisting the banking royal commission, Michael Hodge QC, dashed the hopes of farmers who had been looking for answers over the next fortnight.
But he said a specialist farm banking hearing would occur in the coming months.
"This [round three] module will not include consideration of lending to farmers," he said.
"Lending to farmers will form one part of the next round of hearings of module four."
Farmers 'treated unfairly by banks', inquiry found
Some farmers and business owners allege banks such as ANZ and the Commonwealth Bank forced them to refinance against their will
A 2016 parliamentary inquiry into alleged impairment of customer loans found it could not prove misconduct had occurred, but did find some farmers had been treated unfairly at the hands of major banks.
"The committee is concerned at the way many of these matters were handled, and that the extant system of checks and balances appears incapable of providing protection or redress to small business customers," the committee reported.
"ANZ acknowledged that it had found some problems with the way it had operated and that there are some individual customer matters where ANZ should have managed issues differently, with more empathy, responded more quickly and been more transparent."
The ABC asked ANZ how many of the 10,000 Landmark loans it had called in since 2009, but a spokesperson declined to answer, saying the bank did not want to pre-empt questions that could come up in the royal commission.
In a 2015 parliamentary inquiry, the Commonwealth Bank said it had called in receivers on 182 customers in the first two years after in acquired Bankwest, but it also declined the ABC's requests for an updated figure.
Reports of loan periods being reduced
Queensland farmers Gail and Joseph Courte accused ANZ of reducing their 20-year mortgage term to six months, and increasing their interest rate from 7.9 per cent to 8.9 per cent in a month.
"The conduct of ANZ through this entire ordeal has been despicable," they wrote to a 2015 parliamentary inquiry.
"It has been described by various members of our team as unconscionable, immoral, unethical, unprofessional and in many areas illegal.
"They forced a loan agreement on us that we did not seek or sign for. They then proceeded to use every tactic they could imagine to drive a once-thriving enterprise into near bankruptcy and homelessness."
ANZ has previously denied truncating long-term loans, arguing customers in default who were given six months to sell an asset may have confused this for a loan period.
Regardless, the bank has since settled privately with many of the farmers it is thought to have or tried to foreclose on.
ANZ chief executive Shayne Elliot recently told the Australian Financial Review, "We did have some failings with respect to the Landmark portfolio that we acquired.
"We were not resourced sufficiently, to first identify the real problems, and then to deal with them in a timely manner. We were wrong. We have said that, and we have remediated [customers]."
That remediation included settlements with confidentiality clauses gagging those who felt hard-done by, preventing them from speaking publicly without risking further legal action.
'There were real victims, human beings'
Many farmers told the ABC they were only willing to make written submissions to the royal commission because of the legal protections it afforded them, but they still could not speak to the media.
Sydney lawyer Stewart Levitt, who has represented up to 20 Landmark-turned-ANZ customers in their disputes with the bank, told the ABC he hoped the royal commission would reveal the full extent of unscrupulous behaviour of farm lenders.
"If you have done something that is really culpable and inexcusable and unconscionable, then a few pieces of silver can't cleanse you of the deed," Mr Levitt said.
"All these bankers should be held accountable for what they've done, because there were real victims, human beings.
"They knew what their actions were doing to many suffering people and you can't disregard the consequence of your actions."
Mr Levitt challenged ANZ's assertion it had remediated customers, saying of the 20 ANZ borrowers he had worked with, only six had successful outcomes.
"In many instances we did deals, but the deals were never satisfactory in the sense they fully recognized the extent of the banks culpability," he said.
"There was debt reduction and it was also made possible for many of the farmers to extricate themselves from total insolvency."
But he said in many cases even when the debt was reduced, some still lost everything, and some never had the chance for remediation at all.
"It didn't go anywhere near to discharging the debt and farmers were still being hit with the shortfall, and sometimes having lost ancestral properties made them bitter.
"They wanted their properties back and it wasn't possible to give them that … there was no amount of money that could make up for many of the losses the farmers had suffered."
Banks acted legally but fairness is questioned
Despite the sense of injustice felt by many of the farmers, the banks had not acted illegally.
Small business and family enterprise ombudsman Kate Carnell said while the contracts were legal, she questioned their fairness, and hoped the royal commissioner did the same.
"The loan agreements that the farmers and rural business owners signed in the past had clauses in them which fundamentally allowed the banks to change the terms and conditions of those contracts unliterally whenever they wanted to," she said.
They are known as "non-financial default clauses", which allow the banks to use new risks such as natural disasters or changing market conditions as reasons to reassess the loans.
It means customers can find themselves technically in default, even if they are making their repayments, and are then forced to refinance to more expensive loan conditions.
"They were immediately made subject to ANZ's loan conditions which were a lot harsher than they'd contracted for with Landmark, and subject to a whole new regime," Mr Levitt said.
As of November 2016, unfair contract term protections that traditionally applied to consumers were extended to small businesses on multi-year loans up to $1 million, and some big banks have opted to apply that to loans of up to $3 million.
"For many farmers their loans are significantly higher than that, and so still it is legal for banks to be able to have these non-financial default clauses," Ms Carnell said.
"We don't believe this is reasonable at all."
Ms Carnell said the reforms were no help to those whose loans predated the change, or those who had already settled and were dissatisfied.
She has also taken aim at confidentiality clauses that restrict farmers and small business owners from speaking out after dealing with a bank.
Stress of dealing with bank affects health
That use of power is not limited to the loans offered to previous customers of Landmark and Bankwest.
For the past four years, Queensland cane farmer Ronald Feierabend has been negotiating to prevent foreclosure from his bank, and is not subject to a non-disclosure agreement.
Photo: Ron Feierabend has made a submission to the royal commission. (ABC Rural: Kallee Buchanan)
"It's been very stressful. I've had to go on medications for stress and I have other health [issues] which have been exacerbated," he said.
"It's got to the stage now where I doubt whether I will be able to run the farm because my health has deteriorated that much now."This article was first published by https://www.abc.net.au/
Author: Marty McCarthy