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Farmers welcome Labor's plan to make banks more accountable
4 March 2019
The National Farmers’ Federation (NFF) has welcomed a commitment by Federal Labor to help level the playing field between farmers and the big banks.
NFF Chief Executive Tony Mahar said plans to make it tougher for banks to foreclose on challenged farm debts and to retrospectively examine the charging of default interest were positive.
"We also welcome Labor’s proposal to double the compensation to farmers who have been wronged by their bank," Mr Mahar said.
"There’s no doubt farmers are at a disadvantage when negotiating with the major lenders.
"This power dynamic can be even more pronounced when farm loans are challenged, including for reasons such as drought and flood which are all too real for many farmers right now.
Mr Mahar said the gravity of a decision to foreclose on a farm business could not be underestimated.
"More often then not it means a family losing not only their livelihood but also their home and often their connection with their community.
"Putting more checks and balances in place, through a new regulatory process, before such a significant decision can be made, is prudent."
Mr Mahar said the Banking Royal Commission had shone a light on the conduct of banks including how they treat their farm clients.
"Of particular concern was the revelation of a pattern of charging default interest on loans that had fallen behind.
"Common sense would say if a farmer can’t meet their existing obligations on time, then they absolutely won’t have the capacity to service additional ‘penalty’ interest charges.
"Labor’s plan to implore banks to ‘come clean’ on where default interest has been applied and to issue compensation to farmers where it was found that the lender has not discharged its obligations is welcome."
Mr Mahar said the NFF acknowledged recent commitments by many lenders not to charge default interest.
"Farmers rely on a fair and equitable relationship with their bank.
"It has been pleasing that following the Royal Commission and in the face of the current adversity faced by many of their primary production clients; many lenders have provided a guarantee to treat distressed agricultural loans with special consideration.
"However, it’s highly likely some farmers are still suffering from unfair and inequitable dealings with their lender.
"The NFF support's Labor's plan to expose instances where such dealings have taken place and to require the offending institution to adequately compensate the wronged farm business."
Media Enquiries: Laureta Wallace
National Agriculture Day 2019