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Analysis: Banks wrongly targeted as business custodians

Analysis: Banks wrongly targeted as business custodians

The banking royal commission has in some ways been a godsend for the banks, highlighting a culture in Australia of palming off blame for failure rather than accepting responsibility.

Just three days in, of two weeks of hearings, it can easily be argued that the royal commission is nothing more than a witch-hunt against some of Australia’s largest and profitable businesses — our banks.

Of course, there have already been some shocking allegations and findings made, including that Westpac “forgot” who it was dealing with and threatened to kick a blind pensioner in poor health out of her home, and of bankers pre-filling advisory forms.

Yet what has also been common among the testimony presented so far is a culture of blaming the banks when things go wrong.

As the legal counsel for Bank of Queensland (BoQ), Noel Hutley stated, banks should be looking to their own information when making lending decisions, but that in doing so they should not amount to taking a “custodial” role for their clients.

The bankers to testify so far have outlined that their loans are not simply rubber-stamped, and there is an investigative process undertaken to determine the level of risk of a loan and the probability of the loan being able to be repaid in full.

At the end of the day, banks are businesses: why would they do business with anyone who looks certain to walk off with their money and not repay it?

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So how could a bank be held responsible for a business failure or deemed to have inappropriately handed out a loan that was voluntarily sought out and entered into?

However before I’m accused of being paid off by the banks or somehow on their side, let me point to another alarming point of the commission so far which the banks may be far less welcoming of.

So far, all of the case studies involve are historic examples of failed businesses. There are close to 2.2 million SMEs currently operating in Australia, many of whom have current or recent examples of stress inflicted on them by poor banking practices.

I know several examples off the top of my head, which will remain confidential for the business owners’ sake. But the point is why is the commission dragging up the past rather than looking at current failings, ones that have a material impact on SMEs in the here and now?

So while some people are calling for blood, I’m calling for a bit of common sense and wisdom — common sense that in business, in banking, in royal commissions and in life more generally, we each take ownership and responsibility for our actions, and the wisdom to know what we as a society can change versus what is simply reopening old wounds for the sake of a headline.

Analysis: Banks wrongly targeted as business custodians
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