A Shorten Labor Government will stand up to the big banks and fight for overdue compensation and justice for farmers.

If elected, Labor will put the clamp on farm foreclosures, make banks come clean on their treatment of farmers if they fell behind in their loan payments, and significantly increase the compensation caps for farmers affected by misconduct.  

Labor has spent the past six months travelling Australia speaking to victims of banking misconduct, including farmers who had their lives destroyed by big banks when they fell behind due to drought or other natural disasters. 

The stories we have heard from bank victims – particularly farmers – have been harrowing. They are the stories the Liberal Government never wanted Australians to hear – Scott Morrison voted against the Banking Royal Commission 26 times.

The Royal Commission recommended that banks agree not to charge default interest on farm loans in times of natural disaster. Default interest is a penalty rate of interest charged on loans where payments are not made on time. Labor agrees and will go further to protect Australian farmers.

Labor will:

• Review treatment of distressed loans, by looking at cases where default interest was charged by banks to farms for the last five years – Labor will force banks to come clean on cases where they have charged distressed farms default interest – penalty interest when a payment is not made on time. Labor’s Retrospective Compensation Scheme will consider the fairness of each case – including why default interest was charged and why the loan fell into arrears. If a bank hasn’t acted in line with their obligations, further steps will be taken to determine whether any compensation should be awarded. This process won’t re-open matters resolved via court processes without the consent of both parties.
   
• Put a clamp on farm foreclosures – by introducing a tough new regulatory process for banks to seek a pre-approval for farm foreclosures. The new process will mean that banks cannot kick farmers off their land until they have received clearance from the regulator which will ensure banks are acting in line with community expectations.
   
• Double the compensation cap for farmers – Labor will double the Australian Financial Complaints Authority’s current compensation caps for farmers from $2 million to $4 million. Under Labor’s compensation scheme, for the first time farmers will also be able to access up to $4 million for non-financial loss in recognition of the strain that the misconduct has put on lives – up from the current cap of $5,000.

The Banking Royal Commission heard cases of unimaginable misconduct against our farmers -graziers who were told they would be left with nothing but the clothes on their backs after being crippled by default interest, drastic devaluations of properties forcing farmers leaving farmers in debt. 

While nothing will erase the damage done by the banks’ misconduct, these measures will help farmers rebuild their lives with proper compensation, and help ensure that we never see this type of behaviour again.

This announcement builds on Labor’s $640 million Banking Fairness Fund to fund 500 new financial counsellors and 200 new financial rights lawyers, Labor’s ground-breaking victim compensation package and Labor’s tough new accountability mechanisms on the banks and regulators.

The Liberals fought against the Royal Commission for 600 days. Scott Morrison voted against the Royal Commission 26 times, called it a ‘populist whinge’, a ‘protection racket’, and spent years of his life fighting to give the big banks a $17 billion tax handout while Australian farmers suffered. They cannot be trusted to implement the Royal Commission’s recommendations or crack down on banking misconduct.

Labor called for the Royal Commission, Labor fought for the Royal Commission, and Labor will work day and night to protect Australian families, farmers and small businesses from financial misconduct.