Banks deny small business lending misconduct claims
(12 June 2018 – Australia) CBA, NAB and Westpac have all denied breaking the law through various dealings with small business customers in circumstances which were brought to light during last month’s royal commission hearings.
While the banks have denied breaking the law, they have admitted some of the behaviour put before the commission was unfair and that there were breaches of the industry code of conduct.
CBA rebuffed arguments put forward by counsel assisting Michael Hodge that it had engaged in “misconduct” in its overcharging of business overdraft customers, after it gave customers incorrect information about the interest rates they were being charged.
CBA argued that it believed it had fixed the issue manually, and although this turned out not to be the case, “this was not a case in which CBA knew of the existence of a systemic problem and simply ignored it”.
Westpac also challenged Mr Hodge’s proposal that it breached the Australian Securities and Investments Commission Act when it allowed a disability pensioner to guarantee a business loan for her daughter. The bank did admit its behaviour might have fallen below community expectations however when it initially opposed her hardship request.
NAB also argued its conduct was “appropriate and commercially necessary” in regards to using the proceeds of the sale from a customers’ main home to pay down debts owed by his small business.
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