The financial services royal commission has revealed that ANZ forced the sale of an intergenerational farming family’s place of residence, despite acknowledging that the sale would not help repay the debt owed to the bank.
Fronting the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, ANZ’s head of lending services, corporate and commercial, Benjamin Steinberg, conceded that the bank’s dealings with an agribusiness customer in 2014 lacked “care and empathy”, but he refused to admit that ANZ’s behaviour fell short of “community standards and expectations”.
Counsel assisting the commission Rowena Orr QC scrutinised ANZ’s behaviour in relation to intergenerational farming family, the Cheesemans.
Following its acquisition of Landmark Financial Services in 2010, ANZ reviewed the Cheeseman family’s $2.95 million term loan and $650,000 seasonal loan facility.
The Cheesemans had overdrawn on the loan facility, which prompted ANZ to transfer the clients to its lending services division that managed delinquent loans. They sought additional financial support from ANZ in 2011 after the family failed to generate the revenue required to repay the debt.
However, ANZ commenced enforcement action after the parties failed to find a permanent solution.
The Cheesemans were then required to sell their properties in order to repay the debt owed to ANZ, but asked if their family home and certain farming equipment could be exempt from the sales.
ANZ refused the Cheesemans’ request, despite conceding that the family home would add no value to the sale of the property.
In his evidence to the commission, ANZ head of lending services, corporate and commercial, Benjamin Steinberg denied that the bank’s behaviour fell short of community standards, despite acknowledging that, if presented with the case today, the bank would manage it differently.
Counsel assisting the commission Rowena Orr asked: “Do you think the community would have expected that ANZ would do more to structure the sale in a way that might not have left the Cheesemans without a place to live?”
Mr Steinberg responded: “I think there are certainly parts of the community that would expect that. But I also think that there might be other parts of the community that would take a more contractual or legalistic approach to it.
“Irrespective of that, our current practice would be that we would support a strategy that, if possible, would involve home retention.”
Commissioner Ken Hayne then interjected and questioned Mr Steinberg over a perceived discrepancy in the bank’s evidence.
“I just wonder why it is that you hesitate to give your view about community standards and expectations at that time, while at the same time you acknowledge that today you should act differently. What has changed in the meantime?” Commissioner Hayne asked.
In response, Mr Steinberg said: “Well, I think there has been a change in the way the community expects banks to behave more generally. I think that that has been driven by a number of different factors, and banks are responding to that.”
Commissioner Hayne continued: “You see, there’s a difference between community pressure and standards, I would have thought. I want you to grapple with the question of standards. What was the right thing to do at the time of these events?”
Mr Steinberg conceded: “I think the right thing to do at the time of these events would have been to structure a different arrangement with the Cheesemans, one that would have potentially given them an opportunity to retain some form of home ownership as well as retaining some way of earning an [income].”
To which Commissioner Hayne replied: “I am struck by the fact that you accept that that’s the right thing to do, and yet you hesitate to say that that’s what the community would have expected. I just see a disconnect between the two.”
Mr Steinberg argued that ANZ could not admit that its conduct fell short of community standards and expectations because, in his view, some members of the community would “feel that banks have an entitlement to recover all of the money that they lend”.
The hearing continues.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.