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Senate accuses ASIC of failing to act on bank misconduct

The regulator’s alleged mishandling of banking misconduct complaints has been labelled as ‘shameful’ and ‘inept’, a Senate inquiry has heard. A parliamentary inquiry has been told the corporate regulator failed to investigate claims about alleged financial misconduct in repossession tactics on farmers. The Senate economics reference committee is currently scrutinising the Australian Securities and Investment Commission’s (ASIC) failing to conduct proportionate investigations and enforcement actions in response to reports of misconduct. During the committee’s public hearings on 4 October, various stakeholders, including farmers, legal representatives, financial advisers, and the National Credit Providers Association, presented their insights. These hearings marked the culmination of the inquiry following ASIC’s appearance before the committee in June 2023.Cattle farmer shares distress from bank’s repossession In a collective submission, Niall Coburn, a barrister from the High Court of Australia, spoke on behalf of 63 affected farmers who had all engaged in commercial loans and many had had their property repossessed due to alleged misconduct. In many instances, these farms had been in families for generations, leading to severe financial and emotional devastation, and, tragically, even suicides, he told the committee. Mr Coburn asserted that ASIC had consistently failed to adequately investigate these systemic complaints or acknowledge their systemic nature. The complaints revealed a recurring pattern of alleged systemic predatory lending and asset-based lending, where loans were granted based on asset value rather than the borrowers’ ability to repay. During the inquiry, Gerard O’Grady, a cattle farmer, shared his experience of losing his cattle and property after taking out a loan with Elders Rural Bank over a five-year term. Despite his business doing well and showing further development potential, when Elders sold its shareholding to Bendigo Bank, the Rural Bank did not support his development efforts, resulting in the loss of his cattle and property. Mr Coburn mentioned that such stories were common, as farmers’ loans were highly complex and subject to increasing interest rates. For instance, an agreement with an initial 8 per cent interest rate could quickly escalate to 18 per cent if overdraft limits were exceeded, leading many farmers into bankruptcy. “When the bank moves on a farmer, they send in a receiver and then they take everything from the farmer, their house, their livelihood, their livestock, they sell machinery and they end up with nothing,” Mr Coburn said. https://www.theadviser.com.au/compliance/44922-senate-accuses-asic-of-failing-to-act-on-bank-misconduct