Stephanie Chalmers* says ANZ and NAB bosses have promised their banks are still ready to lend despite a clampdown on lending practices.
The bosses of ANZ and NAB have told a Parliamentary hearing their banks are willing to lend, amid a greater focus on responsible lending in the wake of the Banking Royal Commission.
Appearing before the House of Representatives Economics Committee in Canberra, ANZ CEO, Shayne Elliott (pictured) used his opening statement to address concerns about the availability of credit, something he said was “on the minds of many”.
“Let me assure you that ANZ is ready to lend, especially for housing and small businesses,” he said.
“After a period of perhaps being too cautious, ANZ is easing back towards a sensible equilibrium.”
It was a message echoed by NAB Interim Chief Executive, Philip Chronican, who followed Mr Elliott’s appearance.
“NAB will remain well and truly open for business,” he said.
“I met with the bank’s top 100 leaders in Melbourne on Monday and emphasised to them that NAB stands ready to lend to good-quality propositions for both businesses and home buyers.”
The Royal Commission revealed lax lending practices by the banks, and ANZ’s Elliott said the ensuing debate about responsible lending had caused the banks to become more conservative.
“As a result of that, Australians … some, not all, will find it a little bit harder to either get credit or get the amount of credit that they would have otherwise had in the past or would like, and I’m not suggesting for a minute that’s wrong, it’s just the reality.”
When asked by the Committee’s Chair, Liberal MP Tim Wilson if it was more an issue of falling demand or supply of credit, Mr Elliott said it was “a little bit chicken and egg”.
“If people find it a little bit harder to get credit, they might step back from wanting to invest in their business or buy a home, so I think they’re highly correlated, but I do think banks’ risk appetite has had a significant impact,” Mr Elliott said.
Mr Chronican said frontline bankers had reported that the tougher enforcement of responsible lending laws was slowing the process of loan applications.
“We believe that, in aggregate, most borrowers who previously would have qualified for a home loan will continue to qualify for a home loan,” said Mr Chronican.
“However, the documentary requirements that are now being asked of our frontline bankers are such that it slows the process down and as a result, we are lending less in home lending that we might otherwise be able to.”
Mr Chronican noted that bankers were undertaking more rigorous verification of applicants’ expenses.
NAB Chief Financial Officer, Gary Lennon said approval rates were steady but the number of loan applications was down.
“From our point of view at the moment, it’s largely a demand factor, so we are willing to lend to both households and businesses,” said Mr Chronican.
Bank bosses not aware of potential prosecutions
Shanye Elliott told the Committee he was not aware of any specific potential criminal charges or investigations into individuals within ANZ following the Royal Commission but said he would be surprised if the regulators were not considering action.
“We’re a large organisation, we’re involved in many of the issues that were called into question in the Royal Commission,” he said.
“I would expect them, in order to fulfil their job, that they should be reviewing certainly the company and that would by definition involve investigating individuals — whether it gets to the matter of recommending for prosecution, I don’t know.”
NAB’s Chronican said he did not know if any of the Royal Commission’s referrals to the Australian Securities and Investments Commission (ASIC), contained in its final report, related to NAB employees but said it was “reasonable to assume” the bank would be included.
NAB is currently facing a civil case brought by ASIC over fees charged to superannuation customers.
The Committee’s Deputy Chair, Labor’s Matt Thistlethwaite raised the fees-for-no-service scandal, which has an industry-wide compensation cost of $1.15 billion and rising.
ANZ Deputy Chief Executive, Alexis George said the bank had reported itself to the corporate regulator three or four years ago after finding it had charged customers for services they did not receive.
“Isn’t that committing a crime?” asked Mr Thistlethwaite.
“And the question that I think that a lot of Australians are asking is why didn’t ASIC prosecute you?”
“I’m not a lawyer and I don’t understand every facet of the Corporations Act — I know we didn’t deliver those services and that’s what we’re remediating at the moment,” Ms George responded.
“The Government gives ASIC hundreds of millions of dollars each year, what on earth are they doing with it?” said Mr Thistlethwaite.
ASIC says bank progress has been slow
Speaking at an industry summit in Sydney, ASIC Chair, James Shipton said the regulator had adopted a strategy of asking “why not litigate?” to deter future misconduct by the banks and meet community expectations that wrongdoing be punished.
“Unfortunately, industry has not made as much progress as we would have liked,” Mr Shipton said.
“Despite the Royal Commission, there is resistance to a meaningful mindset change.”
In Canberra, Mr Chronican disputed that view, pointing to the resignations of Andrew Thorburn and Ken Henry and the bank’s decision to scrap its “Introducer” home loan referral payments, which he described as a source of “considerable embarrassment”.
However, Mr Chronican said there are several Royal Commission recommendations the bank does not support, including the suggested changes to the mortgage broking industry.
* Stephanie Chalmers is an ABC business reporter based in Sydney. She tweets at @StephChalm.
This article first appeared at www.abc.net.au.
