Australian royal commission reveals predatory bank lending to small businesses
By
Oscar Grenfell
16 July 2018
The ongoing royal commission into financial services has underscored the predatory practices of Australia’s banks and financial institutions, and the dire impact they have had on workers and mortgage-holders, farmers, small businesses and franchisees.
Hearings over the past two weeks have shown that some of the country’s largest banks hit farmers in financial distress with asset-fire sales, abrupt business and property re-evaluations and foreclosures. In some cases, farmers were forced off their property, despite having never missed a mortgage repayment.
The testimony followed earlier sessions of the commission, in May and June, focusing on relations between the banks and small business owners. Despite having received almost 300 written submissions, that section of the inquest lasted just several weeks and heard from a handful of affected individuals.
This was in line with the perfunctory character of the commission as a whole. It was called by the federal Liberal-National Coalition government in an attempt to assuage widespread public anger over the practices of Australia’s banks, which are among the most profitable in the world. The commission will issue a series of toothless recommendations, which the banks will be largely free to ignore.
The hearings nevertheless made clear that providing dubious loans to franchisees and small business owners that threaten to financially cripple them, is integral to the business model of the major banks and financial institutions. They showed that financial advisors and bank representatives are trained to push loans, even when clients have little chance of repaying them.
A number of the submissions to the inquiry were…