Wednesday, 14 November 2018
Banking and Financial Services
I have repeatedly called for the terms of reference for the royal commission into banking to be extended to include examination of the conduct of administrators and insolvency practitioners, particularly where these entities are acting against farmers. I've also called for them to include the dispute resolution process of financial service entities, to extend the reporting period and to increase funding for the royal commission to allow it to hear all submissions and to undertake these additional investigations. However, despite the unanimous support of the Senate, I and the victims of banking misconduct continue to wait for government to implement this.
A key element of the royal commission into institutional child abuse was its preparedness to hear firsthand accounts of victims. More than 6,000 individual stories gave a human face to the tales of abuse and gave victims a chance to publicly name their tormentors, beginning the process of justice. Despite receiving 9,000 submissions, only 27 victims of banks have been heard. My efforts to address this have so far fallen on deaf ears. The victims of financial abuse cannot wait anymore. Tonight, using the opportunity presented by this adjournment debate, I will begin the process of recounting the stories of individual bank victims for all Australians to hear and to be preserved for all time in the record of the Hansard of the Australian parliament.
This evening I begin with two heart-rending human tragedies of the great people of the land who fed our nation but were ruined by the callous greed of the banks. The first is the case of the A family. I will not reveal the actual name, to protect those concerned from further victimisation, but I can give the identity of the farmer and the banks should anyone wish to know. Mr and Mrs A had a term loan limit of $5 million. He was already paying 7.98 per cent on the $5 million loan. The interest totalled $399,000 per year. He then had some unexpected bills and was $231 over his $5 million limit and did not pay it out for some time. So what would you expect his penalty charge to be? First, he attracted a three per cent per annum interest rate on not just the $231 but the total balance of $5,231,000, which is $411 a day. This means that the interest rate on the $231 is 178 per cent per day. Multiply this by 365 days and the annual interest rate is 64,942 per cent on that $231. Over the whole year the farmer would pay $150,000 higher interest for only being $231 over his limit. The bank involved has stated to one of my staff that it charges penalty interest rates along these lines all the time. Is this a practice the government encourages banks to keep doing and to avoid paying redress on, because it has not extended the royal commission to look at this case?
The second example is a case the royal commission has not investigated either, despite it being submitted to the royal commission. The second case is of a homeowner, Mr B. Mr B is now destitute and living in a $150 caravan. Mr B was $758 in arrears on his $500,000 home loan. His late payment fee was five per cent per annum. But that was not charged on the $758, as we would expect, but on the whole loan balance of $500,000. In this case, the homeowner was charged a late payment fee of $25,000 per annum or $68.50 a day. This is an annual late payment fee of 3,298 per cent on his $758 in arrears. My question to the government is: (1) since the royal commission has not investigated this issue or the lending organisation involved, is it fair to assume the royal commission is not interested in this sort of immoral lending practice and (2) how will the victim, who now lives in a $150 caravan, be able to get redress for the exploitation of the lender that caused him to default, thereby losing his house and his ability to get justice?
Senate adjourned at 19:41