ASIC dismisses claims of bank misconduct

by Julia Corderoy15 Sep 2015
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 has reported.

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.”


  • by Spencer Murray 15/09/2015 8:47:07 PM

    How very convenient to say that ASIC has not got the power to prosecute criminal bank behaviour. What a cop out. Why has the government got this USELESS department if their hands are so tied? The government should redraft the act so that Australian citizens can get some truth. CALL A ROYAL COMMISSION INTO BANKING CRIMINAL ACTIVITY. We will then see how useless Medcraft & Co. have been.

  • by Tim H 16/09/2015 10:03:39 AM

    This response from Mr Medcraft highlights the question so many brokers are asking: What just is the purpose of ASIC in the lending industry?

    They say they are there to police the industry, but when it comes to actually carrying out that function there appears to be some major issues on what they can do and to whom.
    I have seen documentation regarding a number of the commercial lending cases where Bankwest and CBA were involved, and while the banks acted within their rights under the loan contract, the actions of the bank certainly were bullish and bullying in the extreme and brought a lot of good people to their knees unnecessarily.

    The documents I read also brought in to question the actions of the solicitors and receivers appointed by the banks and the outrageous fees charged by these people. Again their conduct could be described as bullish and bullying in the extreme.

    Like Spencer Murray, I think the actions of the banks should be investigated more thoroughly and if a Royal Commission is the solution then bring it on.

    The sledge hammer approach against brokers compared to the wet lettuce leaf action of ASIC against the major banks over recent times is just laughable.

  • by Harold Spencer 16/09/2015 11:16:45 AM

    "The sledge hammer approach against brokers compared to the wet lettuce leaf action of ASIC against the major banks over recent times is just laughable."

    If only it was laughable! This is the single greatest issue facing our industry. ASIC needs to provide a level playing field for all stake holders and by not (being able) doing this they are letting all Australian's down. ASIC wants more power and more funding yet the argument to support their wants is diminished every time by their inaction to handle what they have at the moment. If a broker were to act in anyway near what the lenders do the broker business would be prosecuted and lauded in the media however when it's a lender ASIC seems to fall over itself offering excuses.