Timbercorp victims say they're still living with depression, anxiety and financial hardship almost a decade after the managed investment scheme went bust and they want the banking royal commission to hear their stories to help bring closure to their ordeal.
"It's amazing the royal commission has come and I hope it highlights everything so others don't get burnt," says Bernard Kelly, an investor in Timbercorp, whose lending arm received funding from ANZ Banking Group.
He is one of thousands of failed managed investment scheme investors and other borrowers frustrated with rough treatment by the major banks who over the coming weeks will be lobbying for commissioner Ken Hayne to investigate their cases.
Farmers who borrowed from Landmark, whose loans were bought by ANZ in 2010, and property developers who borrowed from Bankwest before its takeover by Commonwealth Bank in 2009, are also among groups wanting the royal commission to use its expansive powers to get to the bottom of long-held allegations that banks inappropriately withdrew their lending.
While none of the parliamentary inquiries to have raked over the managed investment scheme failures and loan impairment cases have found illegal conduct by banks, a parliamentary joint committee on corporations and financial services report on loan impairments in May last year found lending contracts have given "banks the power to behave in ways that are unethical, unreasonable and lack transparency".
Small business ombudsman Kate Carnell, who has also investigated allegations about inappropriate loan impairments, said it will be important for the royal commission "to understand from the beginning this will not be about black letter law".
"The banks have more lawyers than most governments and they will not have breached contract law. Our experience is their contracts have broad catch-all clauses, which allow them to do almost anything. The challenge here is to look at what is ethical, moral, reasonable and not unconscionable."
'Lift a rock and something will crawl out'
Jeff Morris, the original whistleblower who identified misconduct in CBA's Commonwealth Financial Planning division in 2008, says he expects the failures at Timbercorp and Great Southern to be investigated by the royal commission. "There are tens of thousands of cases and the banks have never been held to account," he said.
"Lift a rock and something will crawl out. The Treasurer and Prime Minster don't have a clue about the the Pandora's Box that they have opened. They are so far removed from the victims, they have no idea what has gone wrong. Hopefully, it will all come out. When it does people will be shocked. A lot of perceptions are going to change."
According to the terms of reference, commissioner Hayne will decide what examples of misconduct to look at, although it is not clear that Timbercorp can be included because the terms of reference exclude non-banks from the inquiry.
Defining a "financial services entity" as an "authorised deposit taking institution" may make it difficult to examine the Timbercorp collapse given the investor loans were made by a non-bank lender, Timbercorp Finance, said Gerard Brody, CEO of the Consumer Action Law Centre.
Another uncertainty is there are still hundreds of cases against Timbercorp victims that are still before the courts in Victoria. The terms of reference say the commission is not required to examine matters before the courts should that prejudice those proceedings.
The commission's timetable and the sheer number of complex cases will also mean it will have to pick and choose its focus points.
"From the minute the royal commissioner walks through the door, he is going to have to apply a guillotine to what he is going to look into and what he is not going to look into.
In making that decision, Hayne will have to take into account his resources, the time it will take, and what else he is going to have to cover," said John Berrill, principal of Berrill & Watson.
But former Labor MP Bernie Ripoll, who drove the Future of Financial Advice reforms, said "unless the government does this right and fully, these grievances will fester and never go away".
"No one wants to come back to this again," Mr Ripoll said. "Fixing this unresolved business for a whole range of ordinary people - farmers, small business owners - means it needs to give satisfaction to people who have justifiable grievances, and provide closure for things that can't necessarily be fixed."
'I've still got my house'
Kelly, who owed $186,000 to Timbercorp Finance but had this reduced to $1000 under a hardship program, says many Timbercorp investors are worse off than him.
"I've still got my house. At 57, I should have it paid off and be financially sound, but I am surviving.
"For a long time I was scared to get a letter out of the letterbox, because letters used to come to us about the money owing.
"I'd planned to do myself in. It had gotten to that point. Now I am glad I didn't. And I assume my kids are glad I didn't."This article was published by https://www.afr.comAuthors: James Eyers Alice Uribe