ANZ was ill-prepared to deal with farmers facing hard times after its Landmark acquisition and did not understand their emotional connection to their land, the banking royal commission has heard.
Barristers assisting the commission argue ANZ lacked empathy — a point already conceded by the bank — in its dealings with former Landmark customers.
Senior counsel Rowena Orr said ANZ’s conduct could be attributed to its lack of preparation for a situation that would require it to deal with significant numbers of agribusiness customers experiencing financial difficulties.
Ms Orr said ANZ did not calculate the number of incoming customers who were going to experience financial difficulty and at the time did not have a specialist agribusiness team to manage accounts.
‘‘This lack of preparation for dealing with agribusiness customers in financial distress was exacerbated by the fact ANZ underestimated the number of former Landmark customers who would experience financial difficulties,’’ she said on Friday.
The bank accepted the quality of the Landmark Financial Services agribusiness loan book was worse than it anticipated in the 2010 acquisition, which Ms Orr said may be attributable to its failure to conduct proper due diligence.
She said before cultural changes in 2014, ANZ’s lending services division relied more on external law firms to deal with customers in financial difficulty.
‘‘It took a less flexible approach to dealing with these customers and demonstrated a lack of empathy and understanding of farmers’ emotional connection to their land and the emotional impact that recovery and enforcement action can have on agribusiness customers.
‘‘At times, lending services increased the interest rates of customers experiencing financial difficulty, placing an additional financial burden on the customers.’’
ANZ has paid $40million in total to 40 to 50 former Landmark customers, through debt forgiveness, refunded interest or compensation.
Ms Orr also criticised National Australia Bank for conduct falling below community standards by charging struggling Queensland cattle farmers more than $2.6million in default interest over more than five years for missed loan payments.
Counsel assisting also recommended possible misconduct findings — for breaching obligations under the banking code — against Rabobank, Bankwest and Rural Bank over specific aspects of their dealings with particular farmers.