Page 4648 - Week 15 - Wednesday, 15 December 1993
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One particularly bad issue has been the taking of guarantees. The bank would often request guarantees of high risk loans. Often the applicant had difficulties with English and did not understand what they were signing. Often the loan was unlimited, and so was the liability of the guarantor. It was not until the loan had blown out by significant amounts that the bank felt motivated to notify the guarantor of the situation. This clearly is uncaring, unethical and unconscionable. Nobby Clark, a chief executive of one of the four major banks, was asked to go guarantor on a loan for a family member and refused because he did not like the terms and conditions of such loans.
The committees which have examined banking practices have made many recommendations. Some have been accepted and some have been rejected. One which was accepted was the banking code of ethics. This has been accepted by the banks, the Trade Practices Commission and the Treasury, but not as yet by the consumer movement. In the end it all boils down to caveat emptor, or buyer beware. You have to be careful and ask lots of questions; ask why, when, how and who; ask about fees; ask about disclosure; ask about profit.
The community's dissatisfaction with the banking sector is leading to marketplace changes. For example, Metway in Queensland is a small bank concentrating on consumer banking, mortgages and credit cards. It has become very successful and is taking business away from the four major banks. Consumers are expressing their dissatisfaction by choosing smaller banks which offer better services and a more honest approach. Just recently the Commonwealth Bank was offering mortgages at a capped rate for 12 months. What they did not tell customers was that the capping started from the approval date, not the date that the money was actually drawn. Therefore, people who, for whatever reason, did not access their money immediately lost the benefits which had probably attracted them to the loan in the first place. The Trade Practices Commission was very quick to put a stop to this.
MR CONNOLLY (Attorney-General, Minister for Housing and Community Services and Minister for Urban Services) (3.46): Madam Speaker, at the outset I want to say how refreshing it was to hear a Liberal politician saying what Mr Westende just said about the banks. For the last three years I have been attending ministerial forums where we have been trying to develop a uniform credit Act, as the number of Liberal governments has been increasing, sadly, around Australia. But we have reached the high water mark. We start going the other way from here. On every point where we have reached agreement on reasonably rigorous provisions in the proposed uniform credit Act, whenever a new Liberal government has come along that agreement has been abandoned and we have weakened still further the proposed pro-consumer uniform credit laws. I am extremely disappointed about that. Only a couple of months ago we signed, in Sydney, under the chairmanship of Wendy Machin, the New South Wales Consumer Affairs Minister, what was the final version of the uniform credit Act. I am very disappointed that since then Liberal governments around Australia have got together and said, "No; we have to further weaken uniform credit laws".
I have written to all my ministerial colleagues urging them not to do that; urging that, in fact, the public has lost its confidence in the banking system, as Mr Westende said, and that it is appropriate for governments to try to redress somewhat the balance between the very large bank and the small business person or the individual. Mr Westende, I can only urge that, whenever you are
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