The banking royal commission is hearing more harrowing stories as it turns its attention to banks' lending practices for small businesses.
The story of a vulnerable pensioner almost being left homeless by a major bank has emotionally moved those at the public hearings and dominated proceedings on the opening day of the third round.
Carolyn Flanagan is legally blind and has suffered from cancer. The elderly Sydney woman nearly lost her home to Westpac Bank after becoming a guarantor for her daughter's business venture, which failed. Ms Flanagan says her love for her daughter outweighed any financial concerns.
Dana Beiglari of Legal Aid New South Wales is acting as Ms Flanagan's lawyer. She has told the royal commission Ms Flanagan could not even sign the relevant papers for Westpac without help.
With Ms Flanagan facing eviction despite her failing health, lawyers fought to keep her in her home. Westpac officials initially refused to let her stay. Eventually, they settled, now saying she can stay in her home the rest of her life.
Ms Flanagan's story clearly affected Westpac's representative at the hearing, general manager of commercial banking Alistair Welsh.
In an exchange with the senior counsel assisting the commission, Michael Hodge, Mr Welsh admitted the bank had warning signs about her ability to make an informed decision when she put up her home as collateral for her daughter's failing business. He says the bank was well aware of what she was risking.
But Mr Welsh insisted, under questioning from Mr Hodge, the bank followed procedure.
The public has made over 5,000 submissions to the royal commission in recent months. The submissions have followed revelations of customers being charged fees for advice they never received. But the royal commission has also rejected claims the Commonwealth Bank had an ulterior motive to systematically default business loans after it acquired another bank, BankWest, in 2008. It has been alleged the bank engineered customer defaults to reduce the price it paid for BankWest, which turned out to be more than $2 billion. The royal commission will not look into those claims.
