The banking royal commission is hearing more harrowing stories as it turns its attention to banks' lending practices for small businesses.
The banking royal commission on Monday turned its focus to small business lending, including whether guarantors fully understand the risks of having their home repossessed if the business hits financial difficulties.
Carolyn Flanagan was one such woman. Ms Flanagan, who is legally blind and has numerous health problems, faced losing her Sydney home after guaranteeing a business loan for her daughter and daughter's partner in 2010.
"I would have signed anything for her. I have to be honest about that," Ms Flanagan, a blind pensioner from NSW, told the royal commission.
"If you can't help your children, who can you help?"
She addressed the hearing via video link as she was too unwell to travel to Melbourne.
Westpac moved to repossess the house after the borrowers defaulted on the loan but, after Legal Aid NSW intervened, ultimately agreed to let Ms Flanagan remain in her home until she dies or chooses to sell it before taking its share of the proceeds.
Westpac's general manager of commercial banking Alastair Welsh said seeing Ms Flanagan was pretty confronting but the bank had followed the correct process in accepting the guarantee.
Ms Flanagan has suffered multiple debilitating health conditions including nasopharyngeal cancer, depression, osteoporosis and pancreatitis. She is legally blind due to glaucoma. She also has trouble with her hearing.
Legal Aid NSW solicitor Dana Beiglari says it is generally older parents who are using their homes as security for business loans for the benefit of their son or daughter.
She said they often wanted to put family first or might feel some pressure to do what their child asks to preserve the relationship.
"In those circumstances, my clients might find it difficult to say not to a financial arrangement that's been put forward to them by their son or their daughter," Ms Beiglari told the royal commission on Monday.
She said parents may not fully understand what it means to be a guarantor and be less inclined to get independent legal and financial advice about the risks, including that the bank may sell the home to satisfy the debt if the business loan falls into arrears.
The two-week public hearing will include another grilling for the Commonwealth Bank over the way it treated businesses after its $2.1 billion acquisition of Bankwest in 2008, at the height of the global financial crisis.
But the royal commission will not delve into long-held theories suggesting CBA had some ulterior motive when it defaulted a number of commercial loans.
CBA has always rejected allegations it engineered customer defaults to reduce the price it paid for Bankwest, an issue raised during parliamentary inquiries and court cases.
Senior counsel assisting the commission Michael Hodge QC said none of the ulterior motive theories about CBA's dealings with the Bankwest loan book warranted further consideration.
"In summary, we have not seen any primary evidence from primary sources that support these ulterior motive theories, and their logic appears to be premised on misconceptions of the facts," he said.