THE big banks of Australia – the ANZ, Commonwealth, NAB and Westpac – have few friends at the moment. That’s not surprising considering the appalling behaviour of the financial bigwigs that has been revealed in the Royal Commission over recent months.
NAB has reaped at least $34.7 million from customer fees for services it did not provide. A Commonwealth Bank subsidiary had financial planners charging dead clients for advice. The ANZ forced an 81-year-old station owner off his property, despite never missing a mortgage payment, after the bank devalued his property due to the drought. Westpac tried to evict an elderly disability pensioner from her home, as it sought to enforce security on a loan she had guaranteed.
All these examples from the Royal Commission reflect a ruthless competitive culture between the four behemoths bent on maximum profits to shareholders, all the while reducing services and shutting down branches in regional areas.
One of the big issues that has raised its head for local councils particulalrly is whether they should be bound by these big banks, due to the security they offer or have the flexibility to source financial transactions with smaller local banks and lending institutions, who can potentially not only offer a more friendly deal but potentially even have the advantage of boosting local employment and services in the banking sector.
The contrary argument is that large scale economic crisis, such as the GFC, or other meltdowns would leave councils vulnerable if they had too much money with regional financial institutions. The name of Banksia for instance in Ballarat or Pyramid in Geelong are not parts of our banking history recalled with much affection.
But in an age of rate capping and ever increasing demands on council services, financial flexibility is certainly an advantage if it leads to better outcomes. There can be little doubt the reputation of the banking sector has not reached a comparable level of mistrust since the Royal Commission. Like the individual client, ethical choice and voting with their feet can provide powerful options.