Page 4646 - Week 15 - Wednesday, 15 December 1993
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Mr Deputy Speaker, I agree with the general thrust of some of Mr Stevenson's remarks - more on previous occasions than on this one - that the banks' and other financial institutions' relationships with their clients at times have been less than ideal. That matter has been canvassed publicly and quite widely. Even though the major regulatory role is with the Commonwealth, the ACT Government has taken steps, where it has authority to do so, through the adoption of, for instance, the uniform credit Act and through our current initiative in seeking improvement to the banking code of practice.
To conclude, Mr Deputy Speaker, I will look very closely at the issues that Mr Stevenson has raised. I think it is incumbent upon Mr Stevenson, and probably on all of us, to make sure that those matters are drawn to the attention of law enforcement agencies, if that appears to be the appropriate course of action. In setting out some of the regulatory framework for banks, and particularly the situation in the ACT, Mr Deputy Speaker, I have made some general comments on this matter of public importance. I have yet to deal with the detail of what Mr Stevenson has raised because it was a little difficult to predict from the title of the MPI what would be the substance. Mr Stevenson, as he often does, has caught us on the hop. I will have a close look at what he has raised, as I am sure all other members will, and if further action should be necessary that action will be put in train.
MR WESTENDE (3.35): It is not just Canberrans who are concerned about the banking industry; it is Australians and the international community. Like the Chief Minister, I did not quite know what tack to take in my speech about this matter. The behaviour of the banks and customer dealings have brought about a code of practice for banks. The draft code was circulated on 3 November and I believe that it is yet to be adopted by the banks. It provides quite detailed information as to how the banks should treat their customers, and what not to do.
The behaviour of the banks in foreclosing on mortgagees and customers has sometimes been quite unjustifiable. There are a number of cases where the banks have acted against very good customers, and often to their own financial detriment. In fact, I can quote an example that I experienced. From the receivers we bought back a business and, because a factory was located on our premises, the bank knew that it would cost us something like $150,000 to shift. They bumped up the rent by something like $40,000 per year, knowing that it was cheaper to stay and sign a three-year lease instead of shifting. What the bank did not understand was that we had enough liquidity to buy the building and change banks, so they lost a good customer of 20 years' standing. But not everybody is in that fortunate situation.
Excesses, and the need to make good losses on problem loans made during the heady 1980s and to those who were often smiled upon kindly by various Labor governments, have led banks to be harsh on good risks. Good businesses and good ideas simply do not get financial support because of those past excesses. There is moral concern about investment in Third World countries involving the International Monetary Fund, and ethical concerns about loans to rural people which in bad times are not honoured. Internationally and locally there is a growing concern about the ethics and morality of the practices of banking institutions.
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