Banking royal commission: Calls for more digging into fire sales as Senators slam banking misconduct

A push to have the royal commission probe receivers appointed to conduct fire sales of farmland is gaining momentum.

Momentum is growing to expand the royal commission, or launch a further inquiry, into receivers appointed to conduct fire sales of the farmland and livestock of distressed agricultural borrowers, after a series of Senators slammed the conduct revealed in the latest hearings for Kenneth Hayne’s investigation.

Last night a number of Senators agreed that the further investigation of the external administrators play in the financial sector was needed, after Katter Australian Party senator Fraser Anning raised concerns the royal commission was suffering from “issues in relation to time, funding and lack of political will”.

“The intent of the royal commission was to address the unconscionable banking practices within the finance sector. In the current form, it is restricted in its ability to do this,” Mr Anning said.

The royal commission has been under pressure to examine the role of receivers in agricultural lending, even though the inquiry’s terms of reference exclude any investigation of administrators, as repossessed farms have been sold at below market value, pushing farmers further into debt.

Over the weekend, Nationals senator John Williams urged the royal commission to use this round of hearings to probe administrators, while Rural Financial Counselling Service’s Chris Wheatcroft called for the actions of receivers to be examined in a roundabout way through the conduct of banks in appointing them.

“The terms of reference need to be expanded to include the behaviour of receivers and their agents,” Mr Anning said. “The issue of receivers’ behaviour has been identified as a source of grave concern and has been linked to a wave of suicides.”

Labor senator Chris Ketter said it was important not to make a running commentary on the progress of the royal commission and allow the inquiry to carry out its work.

But Mr Ketter said the role of external administrators when dealing with distressed rural borrowers was “an issue that warrants further scrutiny into the future”.

“There are stories about rural properties being sold for half their original worth in times of drought,” Mr Ketter said. “I know that I expressed some concerns about the behaviour of valuers, and I am concerned about the inherent conflict of interest that exists with the profession of valuers and the problem with major banks having panels of valuers and the inevitable conflicts that occur as a result of that.”

“The terms of reference are not those which we probably would have supported. But let’s just get on with the issue,” Mr Ketter said. “There was a lack of consultation on those terms of reference, which would’ve been better handled if the victims had been consulted. In fact, it would’ve been, probably, advisable for ASIC to have been informed and to have had an input into those terms of reference. But that didn’t happen.”

Nationals senator Barry O’Sullivan, whose private member’s bill for a commission of inquiry into the banks triggered the government’s establishment of the royal commission, said he was “inclined to agree that the terms of reference could have been broader in some categories”.

On Wednesday, Mr Hayne said he was “struck” by a case where ANZ’s external administrator pushed for the sale of four properties owned by West Australian farmers Stephen and Janine Harley in August while the Harleys were looking to sell in spring to get a better price. Receivers ended up selling for almost $600,000 below a recent valuation.

“The banks know full well that, with a break in the season, there will come a lift in commodity prices and a restoration of the value of the property, but they’re not interested in waiting for that,” Mr Sullivan said.

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“We need, as a government and as a parliament, to support this inquiry, if it requires more time and more resources, until it does this job very, very thoroughly,” he said.

One Nation senator Pauline Hanson said the royal commission had done an “good job” of investigating misconduct where the banks had admitted fault.

“However, for misconduct where the banks have not admitted fault, the commission has been found wanting,” Ms Hanson said. “In my opinion, there has not been sufficient time given to hearing the array of stories from farm victims,” she said, adding that her second concern was: “the manner in which the Hayne commission glossed over the small business scandals”.

“I call on the government to extend the funding, time frame and terms of reference to include receivers, liquidators, administrators and mortgage insurance for the banking royal commission so that farmers and SMEs can get justice and legislatures can make sure no Australian ever has to suffer through this mistreatment at the hands of banks,” Ms Hanson said.

Liberal senator Ian Macdonald said the government had established a “sensible, well-resourced and targeted royal commission”. “The government will be watching closely the recommendations of the royal commission and, as required, it will be taking legislative or other action that might be needed and recommended,” Mr Macdonald said.

Greens senator Peter Whish-Wilson said he was concerned “the time frame is too short and that not enough will be done”.

Small business ombudsman Kate Carnell earlier this month said the royal commission’s hearing into small business lending fell short as they didn’t examine the relationship between bankers and receivers and called for the inquiry to be extended.