Banking royal commission: ANZ’s Steinberg rejects ‘systemic issues’ claim

An ANZ executive refuses to accept the way it dealt with farmers after its Landmark buy amounted to a systemic failing.

ANZ head of commercial lending services Ben Steinberg has refused to accept the bank had “systemic issues” in the way it dealt with farmers following a calamitous $2.4 billion takeover of rural lender Landmark.

ANZ was forced to overhaul the way it dealt with its agribusiness customers after a series of damaging media stories piqued political interest in the plight of a number of farmers who were thrown off their land when they fell into financial pressure.

Appearing at the royal commission for a third day of hearings, Mr Steinberg was unable to say whether ANZ had launched an investigation into staff falsely witnessing documents, after admitting to misconduct relating to the Handley Group. Queensland cattle farmer Elizabeth Handley’s properties suffered through fire, flood and drought. But when she asked ANZ to postpone a mediation meeting because she had received adverse biopsies and shortly after would be diagnosed with cancer, the bank declined.

ANZ had previously told the royal commission that it had reported 30 financial advisers who had falsely forged documents. Mr Steinberg said a branch manager falsely witnessed the Handley documents and that, evidently, the issue of false witnessing extended beyond ANZ’s wealth division.

Mr Steinberg said he did not know if ANZ had investigated the extent of false witnessing outside the wealth management unit. “I accept the general principle that there should be a culture where this type of behaviour is unacceptable,” Mr Steinberg said.

In a few short years after ANZ bought Landmark from the then-listed wheat exporter AWB in 2009, about a third of the loans became impaired or were considered high-risk of default soon. By 2013, $722 million worth of Landmark loans were impaired or considered high risk — a total of 1050 loans — and the bank ended up forcing 162 farmers off their land.

After 2015, ANZ began to change the way it operated, and used farm debt mediation more frequently. It set up a Landmark taskforce, which reviewed about 200 customers. Under the old management system, a number of farmers were refused financing at the wrong seasonal time, pushing them further into financial distress. The bank now has a dedicated agribusiness team “with an understanding of farm styles”, the royal commission heard.

In July 2015, 60 Minutes broadcast an expose of the ANZ’s treatment of the Phillotts, which included former ANZ boss Mike Smith apologising for its actions on national television.

Mr Steinberg said ANZ had struck settlements with about 40 or 50 farmers over their debts and roughly $40m was paid, including for debt forgiveness as well as compensation.

Counsel assisting Rowena Orr asked if a “significant motivation” of the bank’s overhaul was to manage the risk to its reputation.

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“I would agree with that proposition,” Mr Steinberg said. “A subset at looking at the bank’s reputation is how we treat our customers and the approach we take with our customers. The driver of our reputation is the way we treat our customers.”

Mr Steinberg did not accept the suggestion there were systemic issues within the culture at lending services at ANZ, which had its culture overhauled following these high profile cases. Mr Steinberg agreed that ANZ now takes into account the emotional impact on its customers of its actions, and that was lacking in its handling of the cases of the Cheesemans and the Handleys, which the commission examined over the last two days.

“When you talk about the customers we’ve spoken about I don’t consider it systemic because we have had thousands coming in and out since I’ve been in the role,” Mr Steinberg said.

However, he said the debt management division that he heads up now works with a different “purpose” and said ANZ’s “four pillars” strategy to treat its customers fairly was “a very important piece of change in our lending services area”.