logo
Receive the latest mybusiness news
SUBSCRIBE TO OUR NEWSLETTER
Copyright © 2020 MOMENTUMMEDIA

Bankers bypassing due caution in loan provisions

Adam Zuchetti
Adam Zuchetti
22 May 2018 1 minute readShare
shadowy, businessman, run

One of the bankers testifying at the royal commission has dropped the bombshell that customer safeguards are potentially being watered down by bankers prior to loan agreements being signed.

Westpac’s general manager for commercial banking, Alastair Welsh, told the commission that bankers “often” pre-witness customer signatures, even on the very documents designed to ensure the bank has met its obligations to borrowers and loan guarantors.

This includes a checklist of whether the person has been provided a copy of all relevant documentation, have received independent legal and financial advice and that they have read and understand the contract into which they are entering.

Advertisement
Advertisement

Mr Welsh subsequently retracted the word “often”, saying that he could not categorically qualify that to be the case.

The stunning revelation came to light after Mr Walsh was grilled on the case of pensioner Carolyn Flanagan, who Westpac tried to evict from her home despite being elderly and in poor health.

 

The commission found that the banker issuing the loan had pre-witnessed Ms Flanagan’s signature on the questionnaire about her understanding of an agreement to guarantee a business loan for her daughter, despite certain points being highly questionable.

Counsel for the commission Matthew Hodge asked Mr Welsh if he could see that received legal advice might have an adverse effect on the likelihood that this checklist would be properly worked through?

“Yes”, Mr Welsh replied.

As a result of the testimony, the commissioner suggested that Westpac’s lending processes had been “more form than substance”, to which Mr Welsh agreed.

SPONSORED CONTENT

 

Mr Welsh admitted the bank had got caught up in the numbers rather than in treating people as people.

We forgot this was about Ms Flanagan — we got stuck in process, he said.

When we realised, we gave her life tenancy in her home.

The royal commission is currently investigating responsible lending to SMEs. My Business is blogging the hearings in real time live from 9.45am each day.

Bankers bypassing due caution in loan provisions
mybusiness logo
Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

Leave a Comment

Latest poll

How satisfied are you with the SME measures in the federal budget?