Banks admit wrongdoing on small business loans


Australia’s banks have admitted to lending-related fraud, fee errors and abusing small business trust in answers to questions from the banking royal commission into the financial services sector.

Key themes that arose from the banking sector’s responses to questions were inappropriate sales practices and mistakes on account and loan fees, which banks assured were confined incidents.


Westpac told the commission it discovered “the dishonest practices of a small number of staff” during its review of small business lending.

This included some Westpac staff using their position of trust to their advantage when dealing with SMEs, including one case where a Westpac employee borrowed from a client.


ANZ confirmed at least one SME customer was affected by staff submitting false information in relation to loan applications. While not “systematic or widespread”, frontline staff also engaged in inappropriate sales practices when pitching loans, the bank said.

On fees, ANZ also pointed to its commercial facilities fees where business customers had been charged for commercial overdrafts and other facilities even after the accounts have been closed. ASIC was notified of this issue in March 2018, and while the total amount is overcharged is not known, the bank says it’s “likely to be material”.

Commonwealth Bank

Commonwealth Bank pointed to account management issues, confirming it had identified 25 borrowers who had defaulted on their loans had been charged the incorrect excess interest rate.

National Australia Bank

National Australia Bank did not provide extra commentary to its evidence on small business lending, but when asked for further details by the commission, but provided logs of 168 events from its Risksmart database which could relate to issues of possible misconduct around business lending.

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