Newsletter – May 25 2018
“For all over my reporting career, which now goes more than 30 years, a constant during that period of time has been Frank Lowy and Westfield.
Now the story of Frank Lowy is one of the most inspirational I’ve ever come across.
A man who arrived in Australia as a refugee, post the second world war, lost his father who killed at Auschwitz…he came to Australia, ended up in partnership with a name called John Saunders. They opened a delicatessen in Blacktown.
He had nothing…absolutely nothing! Zero when he arrived in Australia and he built that to ultimately one of Australia’s richest people.
Today was the end of the Frank Lowy era” (Listen here)
Newsletter – May 25 2018
This week we saw the third round of the Banking Royal Commission – this time focusing on the bank’s lending to small businesses.
I warned you last week that if you thought allegations of ripping people off, charging dead people fees and lying to the corporate regulator were bad…just you wait. (Read here)
What has been uncovered already has been enough to make some peoples hair on the back of their neck crawl.
Elderly, blind people forced out of their homes…businesses promised one thing, only to told something completely different…businesses given loans when they really shouldn’t have been.
Families destroyed, friendships destroyed, livelihoods destroyed and reputations destroyed.
These are just some of the allegations unearthed this week.
Last week I told you the Royal Commission were calling for submissions from Small Business who claim they have been mistreated to come forward. Turns out there were more than 5,500 submissions from small businesses around the country.
Now, I have mentioned a couple of times that confidently agreements, between a small business and a bank, are basically null and void. People do not face repercussions or legal action from breaking that confidently agreement in a Royal Commission.
So basically – nothing can be swept under the rug. It’s going to come out.
Now, over the years we have heard some horrific stories of small businesses being mistreated by the banks, in particular in regards to small business lending. I mean, they have really horrified me.
This week we got out first taste of what is to come. Just one story I want to tell you about – Carolyn Flanagan is an elderly disability pensioner.
Carolyn was nearly forced out of her home after Westpac tried to enforce security on a loan she has guaranteed.
Carolyn has guaranteed her daughter’s small business loan in 2010. She was aware at that time that if the loan turned bad, the bank would be able to sell her home. She agreed regardless after her daughter promised the loan would be repaid.
As you have probably guessed – that’s exactly what happened. Her daughter couldn’t repay the loan and the bank took what was put up as security – Carolyn’s home.
Now – this brings in the bigger question of who you can trust. Unfortunately, all too often we hear stories of children ripping off their parents. And this is a classic example.
Legal Aid NSW senior solicitor Dana Beiglari, who represented Carolyn, told the Royal Commission it was “generally older people” who acted as guarantors, and in her experience, many found it hard to say no to their children.
Ultimately, after applying to the Financial Services Ombudsman – and an ordeal with Westpac – Carolyn was allowed to stay in her home until she died or sold the property. But not without a fight.
Blind, elderly and nearly forced to live on the street – these are the real faces of victims of the banks and their harsh policies on small business loans.
Now, its cases like this that showcases the banks failure to adopt key recommendations – particularly for guaranteeing loans.
Phil Khoury, who I spoke to this week on Money News, conducted an independent review into the Banking Code of Conduct at the behest of the Australian Bankers Association after it was forced to address the issue of its lending practices.
This week he fronted to Commission to explain what he found as well as raise some questions about why banks have not adopted his recommendations.
Khoury told me “In small business lending, securities are essential or many, many business loans would not be made.
“But people were telling us that there were instances of family members being persuaded or coerced into providing guarantees that they didn’t understand in order to provide that security.” (Listen here)
Its instances like this – where the banks have failed to properly enforce proper codes of practice that have led to many losing businesses.
We will be hearing many more cases like this over the next couple of weeks.
One other interesting result to come out of the Banking Royal Commission was the dismissal of a major conspiracy theory involving the Commonwealth Bank and BankWest.
I told you a little about this last week – back during the Global Financial Crisis, Commonwealth Bank was in the middle of acquiring BankWest.
Kate Carnell, the Small Businesses Ombudsman, told me on Money News there were some near 2000 preforming BankWest loans – loans which were being repaid and not missing payments – just recalled or changed conditions. (Listen here)
People thought this was a conspiracy to reduce the asking price of BankWest. It was this theory that was dismissed.
I used the example last week of the banks coming to your door and asking for your entire mortgage back within a week…could you do that? Could you find the cash? I don’t know anyone who could.
Now, the Royal Commission continues next week. As I said, no doubt more stories of the banks incompetence will be laid bare.
For all this and more, visit www.moneyaction.com.au
9News –
Frank Lowy, Australia’s fifth richest man and founder of Westfield, signs off after 60 incredible years – Watch here
Money News –
Are company tax cuts dead in the water? – Listen here
Highlight –
250,000 salmon on the loose in Tasmania – Listen Here
Interviews and Stories for May 2018
‘I’m ashamed’, NAB boss disappointed by fraudulent conduct in the company
1 million jobs created but unemployment on the rise?
3.5 million Aussies claim work-related car expenses annually. Here are the most common mistakes
AMP directors resign after shareholder outburst
ANZ boss ‘confident’ company won’t be stung for selling inappropriate products
ANZ to enforce strict ‘no exceptions’ policy following Royal Commission revelations
Are company tax cuts dead in the water?
Are you being ripped off by your super fund?
ATO facing investigations over dodgy debt recovery
Aussie households receiving more in benefits than dishing out in taxes
Australians forking out more for transport than gas and electricity
Big banks commit millions to new consumer protection fund, yet to pay a cent
Budget needs ‘bigger buffer’ to get through tougher times on the horizon
Budget reply | Opposition claims it can double government’s income tax cuts
Commonwealth Bank ratings downgraded to negative following damning report
Does the Power Market need more regulation?
Energy Minister won’t ‘jump the gun’ in forcing AGL to sell Liddell
Energy Prices or Company Tax Cuts?
Fear of ‘undue concern’ stopped CBA from notifying customers of mass data breach
Federal Budget 2018 wrap: ‘It’s an election budget’
Fisherman’s Frenzy: Hundreds of thousands of salmon escape farming pens
Furious shareholders launch attack
Google accused of cashing in to sell out user data
Government left red-faced after blackmail charges dropped
Has the Consumer Protection Fund been set up?
How did QANTAS change its image?
How far do you commute for work?
How Frank Lowey became Australia’s 5th richest man
How the ‘F’ word determined a court case
Insurance giant removes itself from comparison websites
Is the current superannuation scheme working? Industry fund boss think so
Is your super fund taking your money unnecessarily?
Queensland welcomes its 5 millionth resident
Should you be expecting a wage rise soon?
Small business takes State Government to court over Westconnex, and wins
Small businesses the silent victims in Royal Commission
The man behind the Australian steel industry
Who made Australia’s rich list?
Why are Aussie’s dumping private health insurance?
Why are bank note printers striking?
Why are small businesses at the mercy of banks?
Why has Telstra shares taken another hit?
Why Labor is committing to ‘progressive taxation’
Will energy prices continue to drop?
Will Toll Prices Rise even more?
Worst is yet to come as Royal Commission investigates lending to small business
Would ACCC have been better to regulate the financial industry?
Ross Greenwood
Ross Greenwood is the Nine Network’s business and finance editor, and hosts Sydney's top-rating radio program, Money News, for 2GB, 4BC. 3AW and all networked stations across the Macquarie Media group. He appears daily on the Today Show - and Nine News.
