The farm sector’s long list of grievances with the banking industry has required an extension to this week’s financial services Royal Commission hearings in Brisbane.
After two days of questions, many focused on ANZ Banking Group’s actions since it bought the Landmark farm services $2.4 billion loan book from AWB in late 2009, Commissioner Kenneth Hayne said the inquiry needed at least until Friday to look adequately into bankers’ behaviour and the nature of their farm finance deals.
The commission has already covered cases which showed ANZ did not act in a “consistent and ethical manner”, including when it forced then 81-year-old Queensland farmer, Charlie Philpott, off his property despite him never having missed a loan repayment.
It also heard ANZ left the fourth generation western Victorian croppers, the Cheesman family, without a home or options to earn a living, and where heart attack patient, Stephen Harley, was given 24 hours to leave his property.
The bank conceded it could also have approached things differently when its staff met at one customer’s request to talk about their financial difficulties, then served the borrower a default notice.
We’ve continued to receive information about the case studies in relation to farm financing
- Kenneth Hayne, Commissioner
The Royal Commission was told 162 farmers were forced to sell their properties after ANZ reassessed the exposure risks to its agribusiness portfolio at the turn of this decade.
The institution was described as spectacularly unprepared for its aggressive farm sector lending expansion.
ANZ's head of lending services, Ben Steinberg, spent more than five hours in the witness box this week, also conceding ANZ made mistakes in the case of beef producers Michael and Dimity Hirst, who invested in managed investment schemes (MIS) with support from the bank.
It allowed them to increase their borrowings, while at the same time began minimising its own exposure to MIS projects, then jacked up the Hirst’s interest charges as their financial troubles grew.
In 10 cases touched on early this week, ANZ accepted it engaged in conduct which fell below community standards and expectations, or breached of the Banking Code of Practice.
Submissions received
The Royal Commission has received almost 270 submissions related to agricultural finance – 32 related to ANZ’s acquisition of the Landmark loan and deposit books.
ANZ picked up about 10,000 agribusiness customers in that deal, including 7124 loans, making it the biggest farm lender in Australia and New Zealand, and second placed within Australia.
By 2013, 1050 accounts, or one-third of the Landmark book, worth about $722m, were considered impaired or high risk.
Mr Steinberg conceded the losses were higher than ANZ had expected.
Also in the spotlight
The commission has also examined the consequences of Commonwealth Bank of Australia's takeover of BankWest's loan book and where it failed to waive fees and provide agri finance package benefits to 8400 customers.
Bendigo and Adelaide Bank has also acknowledged instances of its subsidiary, Rural Bank, overcharging fees to 2164 customers, and underpaid interest.
National Australia Bank admitted failing to pay interest on customer accounts and 85 cases of misconduct concerning farm clients since 2013.
Former High Court judge, Commissioner Hayne, said the case studies investigated so far had taken longer than anticipated.
There are a lot of people out there concerned
- Commissioner Hayne
“We’ve continued to receive information about the case studies in relation to farm financing, both in the form of supplementary statements and further production under notices to produce,” he told Tuesday’s hearing.
The commission has subsequently delayed for three months its scrutiny of natural disaster insurance case studies which were to be heard later this week.
This week’s hearings were subjected to interjections from Queensland MP Bob Katter and attended by recently disqualified One Nation Senators Rod Culleton and Malcolm Roberts.
Mr Katter asked if the Royal Commission was going to address “why these things happened and what we can do about it to improve it in the future”, to which Commissioner Hayne responded by saying a great deal of work was happening behind the scenes.
"I understand your concerns. You are not the only one who is concerned, Mr Katter,” he said.
“There are a lot of people out there concerned, I know that."
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