Carnell interrogates banks over treatment of small business

The Australian, November 21, 2016:

Kate Carnell has issued summonses to four of the nation’s banks to attend private hearings this week and next week, making good on her promise to use “royal commission-like” powers to probe the banks’ treatment of small business customers.

The banks targeted are Commonwealth Bank, ANZ Bank, National Australia Bank and rural lender Rabobank.

Carnell, the Australian Small Business and Family Enterprise Ombudsman, was tasked at the end of August with re-examining 20-plus cases of alleged unconscionable conduct considered by the parliamentary inquiry into the impairment of customer loans.

Many of the cases have also been before the courts and the Financial Ombudsman Service.

In a report due by December 13, Carnell will make recommendations to the government on legislative, regulatory and cultural measures to safeguard businesses against future banking misconduct.

While the ASBFEO will not make any findings, it could suggest that some cases need further work, although Carnell said yesterday that was not her present intention.

About six to eight matters from the original case load will be considered in the private hearings.

Each of the customers will appear, as will the key decision-makers in the various banks.

Neither of the parties will be legally represented.

At the end of this month’s private hearings, the ASBFEO will convene a public hearing to be attended by the four major banks.

This will be the industry’s opportunity to have some input into the policymaking process.

Carnell said the banks had been “incredibly co-operative” throughout the inquiry, and she had no intention of turning the private hearings into a witch hunt.

“We have questions for both sides,” she told Four Pillars.

In early August, the government announced the separate Ramsay review of the financial system’s external dispute-resolution and complaints schemes.

ASBFEO has provided interim findings to the Ramsay review.

The Carnell inquiry, the Ramsay review and the annual inquisition of the major-bank chiefs were all part of a package of measures announced by the Turnbull government in response to misconduct in the sector and the Labor Party’s electorally popular call for a banking royal commission.