A farmer who looks set to lose his farm after taking his bank to task over what he says were dodgy lending practices has vowed to keep fighting for accountability in financial services.
Key points:
- Ronald Feierabend has accused Suncorp Bank of withholding essential documents that would have allowed him to settle his case for free
- The University of Wollongong’s Andy Schmulow says the regulatory system should require banks to prove they acted fairly
- A review has identified complex laws and difficult definitions were key issues in the financial sector
It comes amid fears more Australians could find themselves at the mercy of a financial mediation system in need of an overhaul.
Ronald Feierabend has been at loggerheads with Suncorp Bank since he discovered discrepancies in the budget used to estimate the profitability of his Wingadee sugar cane farm, near Bundaberg, during a 2014 refinancing application.
A series of mediations failed to resolve the dispute and in 2021 the Supreme Court ruled that Suncorp could appoint receivers and sell the farm to recover outstanding costs.
The property will now be auctioned on September 1st.
According to prudential regulation expert Andy Schmulow, the result was a sign of the failures of a debt mediation system that still favored banks.
Schmulow has called for a complete overhaul of the financial dispute resolution process.
“They come like vultures”
Throughout his lengthy complaint, Feierabend said he had been subjected to extreme pressure from the bank, which he accused of not acting in good faith.
Police escorted Mr Feierabend off his farm in March. (ABC Rural: David Barnott-Clement)
In March, police escorted him outside the farm.
“There have been people who have been looking at the property, and you know, they think it’s going to be a fire sale,” Feierabend said.
He alleged the bank withheld essential documents and failed to disclose his right to a free internal dispute resolution process that would have saved him tens of thousands of dollars and resolved the matter sooner, a claim the bank denies .
“Emotionally, the way I’ve been attacked, I feel like I’ve been violated,” she said.
Suncorp Bank says it operates with all legislative requirements and best practice. (AAP: Dave Hunt)
“I have seen how the property deteriorated to such a state that the entire property needs to be reformed or rebuilt.”
A spokesman for Suncorp Bank said that due to confidentiality limitations, it would not comment directly on Mr Feierabend’s case.
“We are committed to working with and supporting our customers and will take our responsibilities as a long-standing Queensland bank with strong roots in agribusiness very seriously,” he said.
“Suncorp Bank has robust internal processes and resources to ensure our customers are supported, including the option of having an impartial internal review of a complaint.”
Twin Peaks regulation fails
Australia’s financial regulatory system is often referred to as the “twin peaks” model due to the interaction between the Australian Securities and Investments Commission (ASIC), which regulates the conduct of the industry, and the Australian Regulatory Authority prudential authority (APRA), which is responsible for ensuring the stability of the wider financial system.
Dr Schmulow, who is a senior lecturer at the University of Wollongong’s Faculty of Law, said it was a model that had solved many problems in the financial sector but failed to protect consumers.
“The Australian model has great international interest, but perhaps a more international interest is why such a good model has failed so spectacularly in terms of regulating conduct in the financial sector?” he said
“How do we know it failed so spectacularly? Well, because this is the evidence [that] came out of the royal commission.”
“The reasons why it has failed are independent of the model itself… [and] would have led to the same failures if we had used other models for the regulation of the financial sector.”
Dr Schmulow says the culture in the banks has not changed since the royal commission. (Supplied)
Dr Schmulow cited ASIC’s broad remit, the size, complexity and, in some cases, the adversarial nature of the Corporations Act 2001 and the timidity of regulators as reasons why the system was still failing after the Royal Commission into Misconduct in Banking, Pensions and the Financial Services Industry.
Instead, he argued for a “principle-based, results-driven” regime that would allow a client to argue their case on the basis of equity.
“In the case of Suncorp and its loans to Mr Feierabend, it would have been for Suncorp to show that they had not acted unfairly,” he said.
“It appears that Suncorp has acted in a way that is unacceptable.
“Hopefully, under a principled regime, they wouldn’t get away with it.”
“Bait and switch” code that misleads consumers
In a statement, a Suncorp Bank spokesperson said the bank “ensures we work with all legislative requirements and best practice, including the Code of Banking Practices”.
But Dr Schmulow said the voluntary code was a smokescreen and, as more people found themselves in financial difficulty, it would prove ineffective in changing the behavior of institutions towards their customers.
“I would actually say that the banking code of practice and its enforcement provisions are something of a bait-and-switch,” he said.
“It is a deception that is put before the consumer to make him think that he has the right of appeal.
“I can assure you there will be more scandals because the culture at our big banks has not changed.”
A spokesman for the Australian Banking Association (ABA), which established the code, said it was enforceable through the Australian Financial Claims Authority (AFCA) and contract law.
“It clearly sets out banks’ obligations to ensure fair dealing with customers who have a dispute, including banks’ obligations to comply with Australian Securities and Investments Commission (ASIC) guidelines for resolving complaints,” he said. to say.
Farmer fighting “to the death”
Feierabend has appealed to ASIC, AFCA, APRA, ABA, Australian Consumer Complaints Commission (ACCC) and numerous senators over his dealings with the bank.
The AFCA said it could not investigate his claims because of the time limits on which they could consider a complaint, while the other agencies determined his complaint was outside their jurisdiction and referred him to ASIC .
In a statement, an ASIC spokesman said reports of misconduct were received on a confidential basis and therefore would not comment on Feierabend’s case or confirm whether it is being investigated.
Feierabend has appealed to regulators in his dispute with Suncorp Bank. (ABC Rural: David Barnott-Clement)
But Dr Schmulow said ASIC’s broad reach, coupled with a culture that did not aggressively pursue misconduct, meant people rarely had the opportunity to investigate their complaints.
Feierabend said that despite all the setbacks, he had no regrets and his legal team was continuing to investigate the mediation process.
“This is a matter of right and wrong, and for me, it’s a fight to the death now,” he said.
“I still believe in my heart that we will come out with the truth.
“I know I’m not the only one in this position. I would do it again. I couldn’t do it any differently.”
As part of the response to the royal commission, the Australian Law Reform Commission is currently reviewing the laws governing the sector, with the aim of simplifying them.
An interim report tabled in Parliament in February 2022 identified legislative complexity, overly prescriptive legislation, difficulty with definitions and unclear objectives as key issues.
The final report is due in November 2023.
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