The Big Four banks in Australia. Photo / News Corp Australia
"You'll never beat the bank."
That was the last thing one victim of Australian banking misconduct wanted to hear, least of all from their own lawyer. But there was plenty of truth behind the ominous warning.
Today Labor is releasing its submission to the Financial Services Royal Commission's interim report, based on 14 roundtable discussions it has held with victims across Australia.
It has found that banks ruthlessly use the legal system to force their customers into long, costly battles they can't afford.
"The legal system is being used as a weapon against us," one roundtable participant said.
Many described the hopeless situation of being issued with a default notice and then facing top solicitors in court without adequate legal representation.
On top of the obvious problem — it's hard to pay for a good lawyer when you're already in financial trouble — victims often found law firms had conflicts of interest due to their own relationships with the Big Four banks.
"Many people ended up representing themselves in court proceedings they could barely understand, fronting up against a team of partners and lawyers from major law firms," Labor's submission states.
It found banks were drowning their customers in complex litigation, even when they were clearly in the wrong, and then offering settlements worth a mere fraction of what they owed.
Some victims said they had decided to walk away from decade-long battles because they simply could not handle another court hearing, emotionally or financially.
"In some instances, customers ended up taking the settlement because they just couldn't continue the battle. People we spoke to felt completely powerless."
Others said they had offered to settle legal proceedings, only for the banks to refuse and persist with the costly litigation.
Shadow Minister for Financial Services Clare O'Neil said victims had "the odds stacked against them".
"One of the clearest messages from our roundtables was that victims who are mistreated by their banks have the odds stacked against them if they make a complaint," Ms O'Neil said.
"In some instances, I believe the way the banks have used the legal system against customers is an abuse of the law.
"The legal system is inaccessible to victims when they have to face up, often representing themselves, against banks with deep pockets and teams of highly paid lawyers at the ready."
Labor says its series of roundtables uncovered types of misconduct the royal commission "has not had the time to inquire into," backing up its calls for the inquiry to be extended.
More than 10,000 submissions were made to the commission, but only 27 victims have given evidence in person.
The Opposition believes the Government is deliberately limiting the commission's time frame, having initially resisted forming it altogether.
Prime Minister Scott Morrison has repeatedly said commissioner Kenneth Hayne will be given more time if he asks for it, but so far, he has not.
Labor's submission includes harrowing descriptions of the toll the banks' actions had on their victims lives.
"We were homeless for two years, and it tore the family apart. I had a big mental breakdown and had to start getting counselling," said one customer from Townsville.
"My husband said he felt like going out the back and shooting himself," said another, from Glandore in South Australia.
"Mum's in hospital now because of what the bank put her through," added one more, this time from Melbourne.
There are quotes like this from across the entire country.
The submission describes the "unimaginable depths of despair" of victims who endured suicide, attempted suicide, poverty, homelessness, stress, family breakup and divorce.
"The stories we've heard are harrowing," Ms O'Neil said.
"I've spoken with people who have had their families torn apart, lost their homes, lost farms that have been in their family for more than 100 years, developed physical and mental illnesses, or attempted suicide."
Hayne delivered his interim report a month ago, along with a scathing rebuke to financial institutions for their "greed" and to the banking regulator for not doing enough to punish bad behaviour.
He found the Australian Securities and Investments Commission (ASIC) "rarely went to court to seek public denunciation of and punishment for misconduct" while the Australian Prudential Regulation Authority "never went to court".
Hayne said: "Too often, entities have been treated in ways that would allow them to think that they, not ASIC, not the parliament, not the courts, will decide when and how the law will be obeyed or the consequence of the breach remedied."
The Government described his report as a "frank and scathing assessment of the culture, conduct and compliance of our financial system".
"Banks and other financial institutions have put profits before people. Greed has been the motive as short-term profits have been pursued at the expense of basic standards of honesty," Treasurer Josh Frydenberg said.
The banks, for their part, accepted their conduct needed to improve.
National Australia Bank CEO Andrew Thorburn thanked Hayne "for his thoroughness and diligence".
"For us at NAB, where we have made mistakes or done the wrong thing, we will own them and fix them. It is difficult to face the statement of 'profits before people' but this is exactly what we need to confront. Banking was built on putting people first and earning the trust of customers. We must return to these principles once again, rather than continuing to be short-term managers," Thorburn said.
ANZ boss Shayne Elliott said it was time to "fix the failures" of the system.
"We accept responsibility and we are determined to improve," he said.
If you are worried about your or someone else's mental health, the best place to get help is your GP or local mental health provider. However, if you or someone else is in danger or endangering others, call police immediately on 111.
OR IF YOU NEED TO TALK TO SOMEONE ELSE:
• LIFELINE: 0800 543 354 or 09 5222 999 within Auckland (available 24/7)
• SUICIDE CRISIS HELPLINE: 0508 828 865 (0508 TAUTOKO) (available 24/7)
• YOUTHLINE: 0800 376 633 ,free text 234 or email talk@youthline.co.nz or online chat.
• NEED TO TALK? Free call or text 1737 (available 24/7)
• KIDSLINE: 0800 543 754 (available 24/7)
• WHATSUP: 0800 942 8787 (1pm to 11pm)
• DEPRESSION HELPLINE: 0800 111 757
• SAMARITANS – 0800 726 666.