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Bankers bypassing due caution in loan provisions

Adam Zuchetti
Adam Zuchetti
22 May 2018 1 minute readShare

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.


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.



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
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016. 

The two-time Publish Awards finalist has an extensive journalistic career across business, property and finance, including a four-year stint in the UK. Email Adam at [email protected]

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