Each session of the royal commission has heard difficult stories from bank customers. This week we really got to feel the pain.
In Brisbane, in front of a rowdy audience of farmers who feel victimised in their dealings with banks, there were jeers, hisses, boos and even cries of “shame” as bank executives were led to explain tales of woe.
It was tough to hear, and the details won’t improve the perception of banks in the community.
Take the example of fourth-generation Victorian farming family the Cheesmans. After getting into financial difficulty, ANZ gave them just six weeks to sell their properties, and a week to leave.
The Cheesmans begged to keep their homes and their machinery so they could earn an income and pay the debt. The bank forced them to sell it all.
Astonishingly, a bank report said including the Cheesman’s homes in the sale of their farming land would decrease the value of the deal because potential buyers just wanted the land, not houses.
Senior counsel assisting Rowena Orr, QC asked ANZ’s head of lending services Benjamin Steinberg why ANZ knew that but was so intent on making the family homeless.
Orr: Given that the consequence of selling the house blocks was that the Cheesmans would be without a place to live, wasn’t it worth at least exploring the possibility of seeking further information about the impact of selling … the blocks with or without the houses?
Orr: But (ANZ senior manager) Mr (Keith) Weybury was not interested in doing that, was he?
Steinberg: Well, I wouldn’t use the terminology he wasn’t interested. He has clearly said no to that proposal.
After everything that happened to the Cheesman family, Mr Steinberg was asked again if the bank’s actions, at any time, fell below “community standards and expectations”.
The bank maintained its stance that it hadn’t fallen below what the community would expect, backing it up with the fact that ANZ had kept true to its word.
ANZ Bank’s Benjamin Steinberg was questioned at the royal commission for two days. (AAP: Darren England)
“I know this sounds harsh, and you can tell that I’m finding it hard to say this, but when you analyse it clinically, what we did in this case is we did what we said we were going to do,” Mr Steinberg said.
Mr Steinberg endured the longest grilling of any witness at this royal commission — two solid days of questioning across seven case studies from after ANZ’s disastrous purchase of rural lender Landmark.
Bank staff pushed to ‘churn’ bad loan clients
Lending Services is where “bad” loans go inside ANZ.
Other banks have different names for this department, but all have a similar one. Loans that are in distress, behind, are look dicey all go there. This week we got a look inside.
A perplexing element for farmers who are “sold up” and foreclosed on, has been banks’ haste.
Often farmers are about to harvest a valuable crop, or reach the key time to sell livestock, but the bank imposes receivers to foreclose just months before financial issues could be ridden out.
This week we got an answer: it feeds into bankers’ bonuses.
A secret ANZ document showed staff in Lending Services were pushed to have distressed farms out of the department.
A key performance indicator (KPI) was to “churn” (finish up) files within two years. You can feel that haste in the ANZ’s treatment of the Harleys.
Orr: So just to recap, ANZ had required the Harleys to sell all of their properties?
Orr: Including their home?
Orr: And their sheep?
Orr: And when they didn’t sell the properties fast enough, it sold the properties itself as mortgagee in possession?
Orr: And when that didn’t raise enough to pay off the debt, ANZ threatened the Harleys with a bankruptcy proceeding?
Mr Steinberg repeatedly said the bank had changed, and staff are now required to have “emotional intelligence” and use “empathy” in dealing with customers.
But ANZ maintained the threat of bankruptcy against the family for three years, until the month the royal commission began.
Farmers speak out for silent victims
Farmers, particularly in the broad acres of Queensland, don’t blink at a long drive.
So there’s been a large and angry audience of farmers following the proceedings.
There have been guffaws as executives have given answers, shock as details were exposed and cheers as a financial counsellor disparaged the work of receivers.
The large contingent has complex problems.
One was in court listening, before heading across to another court to finalise his divorce.
Every night, at the end of the hearings, they go to a grassy field next to the Brisbane Magistrates Court and hold a silent vigil to remember farmers who have taken their ownl lives after disputes with banks.
If you or anyone you know needs help:
Only four farmers have told their story, to cover the entire experience of farming finance across Australia (there may be one more on Monday).
Even those cases were so complex that, by Tuesday lunchtime, the hearings on natural disaster insurance set for the end of the week were bunted to September.
Next week will now focus on financial institution’s interactions with Indigenous Australia.
Next month it’s superannuation and after that, insurance.
Farmers, who have been pushing for more time to be devoted to their cases, get another day or two to be heard.