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Australia's second-biggest bank has been accused of pushing refugees into penury by approving large loans to people who had no idea of what they were signing, and with no means to repay them.
The Commonwealth Bank, which in the six months to last December saw profits rise 4 per cent to A$2.4 billion ($2.77 billion), is now changing its lending policy and has waived most of the loans.
The loans were exposed by the ABC TV investigative programme Four Corners last night during a broader expose of lax lending policies that it said were leading thousands of Australians deep into debt.
Reporter Stephen Long said 18 cases of unaffordable loans to refugees had so far been confirmed but that lawyers and financial counsellors working within the Sudanese community feared there were many more.
And JP Morgan chief banking analyst Brian Johnson told Four Corners, speaking of broader lending policies, that banks now handed out credit cards like there was no tomorrow. The group of debt-ridden Sudanese refugees were thrust into a far deeper financial chasm. Four Corners said most did not speak English, had no concept of interest-bearing loans, and were out of work.
Consumer Action Law Centre lawyer Lauren Walker told the programme that in one case a 9-year-old girl was accepted by the Commonwealth Bank as an appropriate person to interpret for a refugee family with no English during an application for a loan.
"It's unbelievable," she said.
Deng Gatlauk, who fled Sudan with his family of eight four years ago, was given a A$20,000 loan even though he had no savings and no job. His wife Nyatut, who could not converse in English and was also without assets, was accepted by the bank as guarantor on the loan.
"He has a family of eight people and on his application form, which he didn't actually complete, his living expenses were estimated to be A$800 per month," Walker said.
"[This] calculates down to A$25 per week, per person, which is roughly A$3.60 per day, per person. It put him in a situation of severe financial hardship."
Gatlauk told Four Corners he had no difficulty in obtaining the loan.
Gatlauk said he understood that he had to repay the money, but did not realise he also had to pay interest. "Because you don't know the system here," he said.
The Commonwealth Bank said in a statement to Four Corners that as a result of an internal investigation into the loans it had scrapped its old eligibility test and introduced a new affordability policy.
Former NAB employee Kim White, now working for the Finance Sector Union, told Four Corners his former employer had pressured him to convince customers to take out larger loans.
The NAB , which also posted a record second-half profit last year, said it followed strict credit policies, processes and controls.
