Julian Leeser (Berowra, Liberal Party) Share this | Link to this | Hansard source

The Turnbull government has cracked down on bank misconduct. Our reforms have included giving more powers and resources to ASIC and APRA, the Banking Executive Accountability Regime and the establishment of the Australian Financial Complaints Authority. Last December, the government also agreed to establish the Hayne royal commission. The royal commission has uncovered several instances of serious misconduct in the banking sector. I was a strong advocate for the establishment of the royal commission.

For many years, I've been concerned about the circumstances that surrounded the Commonwealth Bank's takeover of Bankwest during the GFC. Following that takeover, the Commonwealth Bank began revaluing the Bankwest commercial loan book. In many cases, according to the valuers, the value of commercial property on which loans had been based dropped dramatically. As the properties were valued less than they had previously been, the Commonwealth Bank was able to trigger the default of business loans under the non-monetary default clauses in the loan agreements, even though in many cases the borrowers had been meeting their regular repayments against that loan. Bankwest victims do not dispute the Commonwealth Bank's right under the loan agreement to call in their loans. The central allegation of the Bankwest victims is that the Commonwealth Bank, in exercising their power under these agreements, acted in a way that might entitle the victims to the right to equitable relief for unconscionable conduct.

Bankwest victims believe the Commonwealth Bank's behaviour has never been adequately examined. Despite inquiries by two parliamentary committees in 2012 and 2016 and the report of the small business ombudsman Kate Carnell in 2017, the controversy surrounding these cases has not abated. At the conclusion of her inquiry, Ms Carnell concluded:

About a third of these cases were simply poor business decisions where the bank appears to have acted reasonably, a third a mixture of poor business decisions and poor bank practice and a third with very real issues where bank conduct is unacceptable and possibly unconscionable.

Ms Carnell's conclusions deserve to be taken seriously. While the small business ombudsman and my parliamentary colleagues were as thorough as they could be, they didn't have the power and resources of a royal commission, nor did they have the forensic questioning skills of a royal commissioner and counsel assisting. They were therefore not able to get to the bottom of these matters.

These cases needed to be publicly aired and properly adjudicated by a qualified person who could test the claims and the counterclaims of the victims and banking executives. The Hayne royal commission provided hope for a fair outcome for the Bankwest victims. The royal commission was supposed to be a chance for the victims to have, as it were, their day in court and to be able to cross-examine the bank's executives and to be cross-examined. I don't carry a brief for the victims. I'm equally happy for either the victims or the banks to have their cases disproven and for them to be embarrassed in a full public hearing. What I want to see is a thorough public investigation of the bank's behaviour that will answer any outstanding questions on the matter. For years, the victims and advocates—people like Peter McNamee, my heroic constituent and party member—have been walking these corridors urging parliamentarians to look at these cases and try to get to the bottom of the bank's conduct.

The Hayne royal commission was supposed to quell the controversy. Unfortunately, the royal commission has so far only spent three days of public hearings and considered four case studies on the Bankwest matters. None of these cases have been the subject of previous inquiries. There was no cross-examination by council for the Bankwest victims or the relevant Commonwealth Bank executives. In my respectful opinion, the commission has inadequately investigated the pattern of behaviour by the banks. It did not publicly re-examine the eight cases which the parliamentary joint committee and Kate Carnell had done a deep dive into, nor did the commission call Ms Carnell as a witness, despite calling other regulators in this area. The commission is due to deliver its interim report at the end of next month, but questions of justice for the Bankwest victims remain unanswered.

The conduct of this royal commission is very different to the conduct of the recent child abuse royal commission. In that inquiry, victims got to tell their story and counsel for the victims were able to freely cross-examine their abusers. This inquiry is being done on tight time frames with fewer witnesses called. No-one is suggesting that this royal commission should call every Bankwest victim, but calling a few more witnesses and answering a few more questions could put the matter to bed. Therefore, tonight I'm calling on the Royal Commissioner to reopen the Bankwest matters and hold public hearings into the dozen or so case studies which Kate Carnell and the parliamentary joint committee considered. I'm also calling on the royal commission to put to the Commonwealth Bank executives the five questions raised by Kate Carnell in her statement of 25 June 2018. Finally, I'm calling on the Commonwealth Bank to support calls to reopen these matters. The bank have always protested their innocence, and it's in their interest to have the public controversy quelled through an open process of investigation. But I strongly believe, in examining these cases, this will help everyone involved to move on with their lives. Failing to do so will reduce the standard of the royal commission. (Time expired)