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Home > Country profiles > Australia > Articles > Article detail

Banks told to scrap despicable laons

Thursday, 8th February 2019

"Banks are under pressure to immediately stop the "despicable" practice of slapping drought-stricken farmers with hefty penalties for defaulting on their loans.

Agriculture Minister David Littleproud has demanded the banks scrap default interest charges for farmers suffering natural disasters, in line with a recommendation from Royal Commissioner Kenneth Hayne.

"It's time that despicable practice ended full stop because I don't believe the rate the banks charge reflects the actual cost to them," he said on Tuesday.

The banking royal commission has also recommended farmers should only be forced off their land as a last resort of action on loan defaults.

Commissioner Hayne's report recommended banks should only be able to call in administrators or receivers on defaulting farmers when all other avenues are exhausted.

The inquiry heard emotional stories of farmers' problems with banks, including from some drought-stricken graziers who had been hit with hefty penalty interest for defaulting on their loans.

Mr Hayne has further recommended that only experienced agricultural bankers deal with those loans, and mediation as soon as a loan is classified as distressed."

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Language: English

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