Senior Counsel Assisting Ms Rowena Orr QC.
Senior Counsel Assisting Ms Rowena Orr QC.

Royal commission: Woman paying $1000 back since the 90s

AUSTRALIAN families grappling with credit card debt are being pushed to the brink of financial ruin, bankruptcy, homelessness and even suicide, the banking royal commission has heard.

Witness Karen Cox, from the Financial Rights Legal Centre, has given evidence to the Financial Services Royal Commission (FSRC), which began its public hearings today.

Ms Cox detailed how crushing credit card debt was affecting ordinary Australians, including one case involving a family with debt of $100,000 who were expected to lose their home as a result.

She said one elderly woman had been paying back "the same $1000 since the 90s", and discussed another consumer who was being sued by debt collectors over their credit card debt.

She said people were "repaying their purchases many, many times over" as they struggled to repay their initial purchases plus interest.

Ms Cox said irresponsible lending practices and credit card debt were putting Australians at risk of bankruptcy, homelessness and suicide.

"For a lot of people we talk to, the loss of their home is very closely tied to family memories, aspiration and the sense of self …[losing a home] is very, very disruptive to family life," she said.

"[Some people] find they can't even rent for the same price as they were paying off their home loan and they may become homeless or forced to relocate to other locations.

"It can exacerbate mental illness and in some cases suicide is threatened and occasionally people do commit suicide over their debt."

Ms Cox also hit out at "outright exploitative" lending practices putting elderly Australians at risk.

She said older people were being affected by their adult children signing them up to joint loans.

"[It is] outright exploitative ... elderly persons [are] left in dire circumstances as a result of a loan for which they've seen absolutely no benefit," she said.


Anthony Waldron, NAB's executive general manager of broker partnerships, is the first banker to appear before Commissioner Ken Hayne.

He faced a grilling over a "very profitable" home loan program which led to 20 sackings.

The bank's Introducer Program, which is still operational today, rewards professionals such as financial planners, solicitors and accountants for referring their clients to NAB for loans.

They usually receive commissions of 0.4 per cent of the value of the loan, although some got 0.6 per cent.

While Mr Waldron said the cost to NAB of Introducer Program commissions was around $60 million on $24 billion of loans, Commissioner Hayne said the figure would be closer to $100 million.

There were restrictions in place on the program, with mortgage brokers barred from the Introducers Program regarding residential home loans.

Introducers also couldn't be related to or financially affiliated with NAB employees and were not allowed to give advice about NAB products, or accept cash on behalf of NAB.

"There has absolutely been a breakdown in these processes," Mr Waldron said.

He admitted that some Introducers were gym owners who referred clients to NAB.


Today kicks off a fortnight of hearings to be heard by former High Court justice Kenneth Hayne.

Counsel assisting the royal commission Rowena Orr said the first week would "focus predominantly on the conduct of financial services entities in connection with applications for home loans".

The royal commission was announced on November 30, 2017 and the first hearing was held on February 12, 2018.

So far, the commission's opening address has heard:

•Since July 1, 2010, the Australian Securities and Investments Commission (ASIC) has cracked down on 51 individuals or companies over home loan application fraud, relating to fraudulent documentation, admin errors or breaches of responsible lending obligations.

•Since that date "almost $250 million in remediation has been paid to almost 540,000 consumers by financial services entities as a result of three particular forms of conduct in connection with home loans".

•Around $90 million in remediation has been paid to almost 17,000 consumers by financial services since July 1, 2010 relating to car loans that relied on fraudulent documentation and breaches of responsible lending obligations.

•Since July 1, 2010, more than $11 million in remediation "has been paid to over 34,000 consumers by financial services entities in response to breaches of responsible lending obligations in connection with credit cards."

•Banks have already paid $750 million in remediation for poor consumer credit practices.

•Add-on insurance will also be discussed during the hearings, with more than $128 million paid in remediation to consumers in connection with add-on insurance since July 1, 2010.

•"As a result of work done by ASIC since 1 July 2010, approximately $239 million has been repaid to almost 540,000 consumers who had been affected by account administration and processing errors in connection with home loans, such as failures to link offset accounts and failures to apply the correct interest rate," Ms Orr said.

•The commission has received a staggering 1894 submissions so far.

•In the last five years ANZ has acknowledged "at least 20 events of misconduct on home lending and mortgages", as well as nine events in relation to credit cards, seven in relation to car loans and car insurance and 22 events of generalised misconduct.

•Aussie Home Loans, owned by CBA, "acknowledged no misconduct in the last 10 years"

•Citibank admitted to six events of misconduct in relation to credit cards and loan accounts.

•While CBA has acknowledged some misconduct, Ms Orr said most of the information provided was not in a form that allowed the commission to "understand the type and scale of misconduct".

•NAB provided numerous examples of misconduct including errors that caused 178,000 clients to overpay interest, but Ms Orr said the bank did not "grapple" with the commission's request for a "comprehensive" response.

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