Today I moved a motion to refer matters relating to the impairment of customer loans to the Parliamentary Joint Committee (PJC) on Corporations and Financial Services for inquiry.
In particular, the Committee will look into the practices of banks and other financial institutions where constructive default or security revaluation and non-monetary conditions of default have been used to impair the loans of their customers.
The PJC will also consider the implications of the relevant recommendations of the Financial System Inquiry, particularly recommendations 34 and 36 relating to non-monetary conditions of default and the external administration regime respectively.
I have also asked the PJC to look at the extent to which borrowers are given an opportunity to rectify any genuine default event and the time period typically provided for them to do so.
In undertaking its inquiry, the PJC will take evidence on the incidence and history of loan impairments and the forced sale of property, and the effect of forced sale of property in depressed market conditions and drought. The inquiry will also look at the adequacy of legal obligations on lenders and external administrators to obtain fair market value for the forced sale of property, and any related matters.
The PJC has been asked to report to the Parliament by 31 March 2016.