31 March 2015 12 Highland Way Highton, 3216 Australia Attn: Senator Sam Dastyari Chairman Senate Economics Reference Committee Senator.dastyari@aph.gov.au Dear Senator Dastyari Re: NAB Toxic Loans in Australia Adele Ferguson has reported on your information sharing proposal with the UK Treasury Select Committee that has been investigating the business practices of the National Australia Bank and its subsidiary the Clydesdale Bank in the United Kingdom. I have been in contact with John Glare who is leading a victims action group in the UK the NAB Customer Support Group. In a recent email John made the following statement: "I cannot believe that NAB would have rolled it out on such a big scale in the UK and not done the same in Australia." Now I have been a keen observer and participant in the Senate inquiry into misconduct at the Commonwealth Bank last year as well as the more recent quizzing of executives of the National Australia Bank (NAB) by yourself and other members of the Senate Economics Reference Committee. These inquiries have focused on the conduct of so called financial planners who gave inappropriate financial advice to mum and dad investors, causing devastating financial losses to many. At no stage were the banks quizzed on business loans that had been designed to defeat the monetary policy tool of the Reserve Bank of Australia or mention made of high break fees that were ruinous to small business people. Also when the award winning journalist Adele Ferguson reported on the UK Treasury Select Committee investigation into the NAB s Tailored Business Loans in the UK, Adele did not make a Page 1
statement such as I also have a pile of similar complaint letters from small business people in Australia... I have also contacted Evan Johns, from the University of Sydney, who is well acquainted with the lending practices of NAB and the other banks and he has said that to the best of his knowledge Tailored Business Loans with the associated collar and high break fees were not marketed in Australia. This then leads back to the question from John Glare posed above. Interest rates in Australia [Appendix A] have fallen substantially since the Global Financial Crisis, however not as sharply as in the United Kingdom [Appendix B]. Interests rates were higher in Australia than in the UK before the Global Financial Crisis and have yet to fall as low as they have been in the UK for some years. In both cases interest rates have fallen by around 5%. Are toxic business loans a sleeper issue in Australia or has a different regulatory environment in Australia prevent the NAB and other banks from marketing business loans of the type described as Tailored Business Loans? If the answer is that these types of loans have been marketed in Australia and with a more gradual decline in interest rates the full impact is yet to become a public issue, then the Economics Reference Committee should be fully briefed on this by NAB and the other major banks. If the answer is that the Regulatory environment in Australia prevented NAB and the other banks from marketing these types of business loans, then the Economics Reference Committee should be fully briefed by the Prudential Regulator APRA so that this information can be shared with the UK Treasury Select Committee. The Financial Regulator ASIC should also be questioned. It appears that there was no regulation of this type of loan by the former UK Financial Services Authority (FSA). Another line of inquiry is did the NAB corruptly influence the FSA? The Senate inquiry last year heard how the NAB corruptly influenced the Australian Financial Regulator ASIC to re-write the laws enacted by the Parliament of Australia so that NAB could mislead potential purchases of NAB superannuation products as to the actual returns they will receive by excluding the impact of fees and charge in the marketing tools used to sell these superannuation products. Competing superannuation products marketed by Industry Funds do not have these fees and charges since they are not-for-profit funds, run only in the interest of members and not shareholders. Page 2
In Summary These are key questions that are important to both the Australian Senate Economics Reference Committee and the UK Treasury Select Committee. (i) (ii) (iii) (iv) Are Tailored Business Loans a sleeper issue in Australia? Did the Australian regulatory environment prevent these types of business loans being marketed in Australia? Was there a regulatory vacuum in the UK that was exploited by NAB? Is there evidence of any corrupt dealings between NAB and the former FSA that allowed NAB to by-pass any regulatory restrictions in the UK? I am sure Mr Andrew Tyrie would appreciate the assistance of the Senator in answering these questions. Yours sincerely Phillip Sweeney {Victims Action Group The Elders IXL Pension Funds Fraud} Now administered by NAB Superfraud.org Cc Mr Andrew Tyrie MP Rushanara Ali MP Steve Baker MP Mark Garnier MP Stewart Hosie MP Mike Kane MP Mr Andrew Love MP John Mann MP Jesse Norman MP Teresa Pearce MP Mr David Ruffley MP tyriea@parliament.uk rushanara.ali.mp@parliament.uk steve.baker.mp@parliament.uk mark.garnier.mp@parliament.uk hosies@parliament.uk mike.kane.mp@parliament.uk andy.love.mp@parliament.uk mannj@parliament.uk jesse.norman.mp@parliament.uk teresa.pearce.mp@parliament.uk david.ruffley.mp@parliament.uk Page 3
Alok Sharma MP John Thurso MP alok.sharma.mp@parliament.uk john.thurso.mp@parliament.uk The Hon Josh Frydenberg MP Assistant Treasurer {Parliament of Australia} Adele Ferguson; Michael West ; Clancy Yeates Fairfax media Evan Jones University of Sydney Note: A copy of this document is available on the website at http://superfraud.org/?page_id=4390 Page 4
Appendix A Appendix B Page 5