Bank Borrowers Warned

Elizabeth Knight wrote in the Sydney Morning Herald 30 July, on bankers who had made money by failing to offset customer credit balances against loans as they had promised. She said ASIC had not disclosed which banks had done that. She finished with the words, “So customers won’t know who to trust”.  Yes they do. None of them!

Don't Trust The Bank

Farmers should know by now never ever to trust  any bank to treat them fairly, unless the bank has shown itself to be trustworthy over a long period of time.  Instead, customers should ensure that their bank does act honestly, by checking. I do trust my bank implicitly but I still check every single transaction very carefully. "Never turn your back on  a bull or a stallion" I was told when very young. I don't. Same applies to bankers.

Farm Loans need careful planning

Farming is always high risk for borrowing because bankers penalise borrowers who do not obey the letter of the loan agreement. That is very difficult when you are dependent on extra profit to service and repay the loan. Seasons, commodity prices and government policies can destroy profits overnight. That presents problems for term loans. We don't often get 15 good seasons in a row. I count on 3 good, 3 bad and 4 mediocre seasons in each decade. Farm loans need to be carefully structured to work for the farmer, not just the bank! Bank super-profits are built on deceiving, cheating and lying to customers. Royal commissions and inquiries have proved that for decades. Farmers are their biggest victims.

Keep The Bank Honest

Always engage an independent banking consultant. An accountant who is not dependent on the bank for client referrals, will do. Have them thoroughly check the loan offer document for deceptions and check all calculations when the first interest charges are made and at least yearly. Always pay a lawyer who does not get referrals from the bank, to check the legal side of the loan offer and contract. That is where many banks first trick trusting customers.  That professional advice is very cheap compared to being robbed blind.