It was the economic hearing of the Senate estimates committee on Thursday but Small Business and Family Enterprise Ombudsman Kate Carnell wanted to talk about the human cost of predatory banking practices.
Ms Carnell was quizzed on the impact of her recent report into lending practices by the big banks to small business which considered the submissions of 23 affected customers.
![Small business ombudsman Kate Carnell says she is optimistic the banks will heed her recommendations.](/web/20170309172707im_/http://www.watoday.com.au/content/dam/images/g/t/0/6/k/0/image.related.articleLeadwide.620x349.gup1us.png/1488449612431.jpg)
"Those businesses are bankrupt on the whole," Ms Carnell said. "There are people who used to be running, often quite successful businesses, living in garages. I can get quite emotional about this."
Roll over
The report made 15 recommendations including setting minimum periods for changes to small business loan conditions and that banks provide borrowers (with less than $5 million in loans) with decisions on roll over at least 90 business days before loans mature.
"For a good number these were people who had not missed a payment on their loan," Ms Carnell told the Senate estimates committee hearing.
Ms Carnell wants to ge rid of non financial covenants for loans under $5 million.
"For the banks to be able to default small businesses with loans under $5 million when people are compliant financially, we don't think that is a reasonable approach," she said.
Valuations
The report also recommended small business borrowers should be given a choice of valuer and transparency of that valuation.
"The banks can require a valuation on your property at any time," Ms Carnell said. "They then charge you for that valuation but won't give you a copy of it. That has been brought up a range of time over the years. You'd think if you pay for something you might have a right to have a look at it."
Ms Carnell said three of the four major banks don't want to provide valuations to their customers, showing "the level of the lack of action by the banks".
There have been 17 inquiries into the banking industry from various perspectives since the financial crisis but Ms Carnell said there has been "very, very little movement from the banks".
When asked why she felt the banking industry would listen now Ms Carnell said she was "a glass half full sort of person".
You'd think if you pay for something you might have a right to have a look at it.
Kate Carnell
"We have tried hard to make them [recommendations] doable and doable quite quickly," she said. "I reckon it's doable so why wouldn't the banks embrace them?"
"I think pressure should be continued to be placed on [the banks]. We will report every six months on how they have gone in implementing these things."
Hushed up
Ms Carnell said some small businesses were too traumatised by their experiences to participate in the inquiry and subsequent report while others had their problems suddenly disappear as soon as the ombudsman got involved.
"There were a few people who seemed to get settlements who were on our list which was very nice to see," Ms Carnell said.
However these settlements meant the small businesses were no longer able to participate in the report.
"Some of the challenges in this case is whenever there is a settlement the confidentiality requirements are fairly dramatic."
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