ASIC has rejected claims of bank misconduct in commercial lending, telling a parliamentary inquiry into banks' customer default powers that there is not enough evidence to take legal action.
The regulator’s submission comes after a number of consumers made complaints to the inquiry over banks’ unfair ability to ability to default borrowers who have not missed a repayment, Fairfax
Some of these allege, according to the Fairfax
report, that the Commonwealth Bank had an incentive to default customers after it bought Bankwest at the peak of the global financial crisis, as the bank needed to claw back some of the acquisition price. The major bank has rejected the claim.
However, in its submission to the inquiry, ASIC said it only received 61 complaints about bank misconduct in regards to commercial lending in the five years since 2010 – which is less than 1% of the total complaints received about finance.
Further, when the regulator made “initial inquiries” into these complaints, it found no evidence of unfair terms or unconscionable behaviour.
“ASIC ultimately determined not to pursue further regulatory action or enforcement proceedings against a lender in relation to these matters," ASIC said in its submission.
“Generally, this was because ASIC's inquiries did not reveal sufficient evidence of misconduct on which to base an enforcement action against the relevant lender, and we concluded that we did not have sufficient grounds to take further action.”
The regulator also clarified that its intervention powers were restricted to matters which affect the broader public, which it did not believe to be the case in this particular matter.
“We consider that to have intervened in matters where our limited jurisdiction for commercial lending may have been invoked would have resulted in ASIC effectively acting on behalf of the borrower in a private, commercial dispute, without sufficiently advancing some broader public interest.”