Banks put screws on small business
THOSE big four banks have been at it again. Trying to screw the rest of the economy for their own selfish sakes.
This time it’s not households and ordinary people. This time they are targeting our biggest employers – small business.
Mess with small business and you mess with the whole backbone of our economy and our culture of entrepreneurship.
But, nah, the big banks don’t care. They’re short-term thinkers only.
Bank boards are willing to cripple and send our biggest source of employment to the wall, just so they can earn even bigger profits and bonuses.
The excuses given by bank bosses, during the latest round of questions from the parliamentary economic inquiry, perfectly demonstrated this selfishness.
They demonstrated no understanding of how unfair their tactics are or the pain they cause small business customers. Instead they doggedly insisted that they didn’t have to care. Profit above all else.
The long-running problem that came under the spotlight at the inquiry centred on the banks’ unfair loan contracts with small business customers.
They can – and they do – cancel a small business loan when the borrower has done nothing wrong.
Yep, pull the funds out from under the business and demand the money back.
Now, you might think perhaps the small business must have missed a repayment? No.
Okay, then maybe they broke some other rule in the contract? No.
Hmm, what if they failed to tug their forelock enough or failed to pay one of the hundreds of other extra high fees and account costs that small businesses are charged? No and no.
These hard-working businesses can do absolutely nothing wrong, yet the banks can demand the money back. Just like that.
It’s called a “nonmonetary default”.
And this unfair clause says if the security agreed for the loan (usually a family home) falls in value, then the bank can cancel the loan.
No repayments have been missed, the business is in good health, cash flow is normal, nothing is wrong.
But the underlying security, which the bank would have been responsible for valuing in the first place, has fallen.
And fallen, in most cases, according to the bank’s revised valuation.
Imagine the devastation this causes small business owners, their families and staff.
“It’s not illegal” was the sum of their excuses to the economic inquiry, so they’re not changing it.
And you might, rightly, ask what the regulator is doing while these poor small businesses are pushed into the mud.
What a great pity our Government and regulators continue to look the other way.