Commonwealth Bank of Australia has moved to neutralise some of the damning publicity stirred up by the banking Royal Commission, confirming it has stopped charging default interest on certain farm business term loans.
The decision applies where farmers are battling drought or the consequences of other natural disasters and therefore cannot meet loan repayments – a breach which previously may have triggered default penalties.
The bank is also establishing a new team of specialists to help businesses “get back on track” if they have experienced financial difficulty.
Solutions available include reviewing repayments timetables and amounts will be open to discussion.
We’ve been listening to our customers to understand and deliver what is really important to them- Matt Comyn, Commonwealth Bank
The policy re-think is part of a swathe of changes pitched to CBA’s small business customer base in the wake of the Royal Commission’s tough assessment of banking culture and behavior to customers.
The Hayne Royal Commission last week recommended the federal government require banks not to charge default interest on loans in areas subject to natural disasters and require lenders to have experienced agricultural bankers to manage distressed farm loans.
It also decreed that only as a "remedy of last resort" should banks appoint receivers to take control of farm loans where repayments have fallen behind.
CBA, meanwhile has promised to progressively remove more banking fees, having already cut 10 business fees in the past year.
Also flagged have been “same day decisions” for unsecured business loan applications of up to $250,000.
Customers with less than $1 million borrowings with CBA will be eligible for speedy loan consideration when the service is introduced next month, although other eligibility criteria may apply.
“We’ve been listening to our customers to understand and deliver what is really important to them,” said CBA managing director, Matt Comyn.
He said the recent launch of the Apple Pay option was another indicator of the bank responding to the needs of small businesses – “the engine room of the Australian economy”.
“When they thrive, we all thrive,” he said.
Back in July National Australia Bank stopped charging a higher default interest rate if drought affected agribusiness customers could not meet their loan repayments.
Some other major rural lenders insisted such penalty costs were already excluded from their lending arrangements.
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