Make hay while the sun shines and reform rural finance
In the wake of the findings of the Banking Royal Commission, Federal Member for Mayo Rebekha Sharkie has reintroduced her Private Member’s Bill to reform the rural finance sector.
The newly labelled Banking Amendment (Rural Finance Reform) Bill 2019 is the same legislation introduced in 2018 and aims to protect small farm properties valued at under $5 million from “arbitrary and draconian” lending practices.
“The banks have behaved badly, and this bill addresses the real problems affecting the rural finance sector,” said Rebekha, Centre Alliance’s Spokesperson for Agriculture.
“When I first lodged this legislation back in February 2018 I went to the National Party and said: 'This is your constituency. This is my constituency. We need to make a change.' And I heard nothing.
“I received no interest from Government in helping to level the playing field between farmers and banks.
“I was a relatively new member of Federal Parliament and I had already heard the horror stories and about the lack of a fair playing field for farmers.
“As I said, now the Royal Commission report has been released, it is my hope that the Government will suddenly become interested in this.
“We can act now. We could use this week to get this legislation through.”
The Banking Amendment (Rural Finance Reform) Bill 2019 seeks to take a measured approach to level the playing the field by:
- Requiring financial institutions (including banks, building societies and credit unions), to provide simple, one-page summaries of the clauses that may trigger a non-monetary default by the borrower;
- Prohibiting institutions from unilaterally undertaking a valuation of security to a loan;
- Requiring institutions to provide six months’ notice before seeking to unilaterally vary conditions of the loan, except where it is a change in the money payable by way of a reference rate or it is to the borrower’s benefit, and except where the borrower has substantively breached the loan agreement;
- Requiring institutions to provide notice and request to meet with the borrower at least six months prior to the expiry of the loan;
- Prohibiting the use of catch-all ‘material adverse change’ (contingency) provisions, except where they relate to alleged fraud or criminal misconduct;
- Requiring institutions to provide a minimum of ‘90 business days’ notice where a loan is not going to be extended or renewed;
- Require institutions to inform the borrower about their rights to external dispute resolution when the borrower receives a default notice from the bank, or when the borrower is in financial hardship and is declined assistance from the bank, or when the institution refuses to renew or extend the borrower’s loan.
“My bill takes a reasoned, measured approach to lending and to levelling the playing field between lender and lendee because we want to make sure banks are still willing to lend money to farmers,” Rebekha said.
“The fortunes of farmers are often dictated by factors beyond their control.
“I am also convinced that the impotence that farmers feel when faced with arbitrary and draconian decisions about their loan agreement is detrimental to the mental health of our rural community
“This issue causes more farmers to take their lives than any other so I call on the Government to act on this issue and take another look at my Private Member’s Bill.”