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With the Government set to adopt all 76 changes recommended by the Royal Commission into Misconduct in Banking, including amending the Australian Financial Complaints Authority (AFCA) Rules to accept disputes dating back to January 2008, it appears as though farmers will also benefit with the Commissioner calling for a national farm debt mediation scheme.
Both The Weekly Times and Beef Central are reporting that the Federal Treasurer, Josh Frydenberg, has indicated that the Government would look at introducing a new farm debt mediation scheme which would require financiers not to charge default interest on agricultural loans in areas considered in drought or impacted by a declared natural disaster. Financiers would also be required to ensure that only those experienced in agriculture would manage distressed farm loans.
In the original interim report released by Commissioner Hayne he commented, "Properly used, however, mediation may allow the lender and the borrower to agree upon practical measures that will, or may, lead to the borrower working out of the financial difficulties that have caused the lender to treat the loan as distressed. Ordinarily, then, I consider that lenders should offer farm debt mediation as soon as the loan is classified as distressed. If used in conjunction with rural financial counselling services, early farm debt mediation should allow wider and better choices for the lender and borrower about servicing, and ultimately repaying the loan."
Fiona Simson, President of the National Farmers' Federation said, "The Royal Commission shone a bright light on Australia's banking sector, on which Australian farmers are heavily dependent. Justice Hayne's recommendations and the Government's affirmative response, has recognised the unique situations farm businesses often face and the always unequal playing field when negotiating with the big banks."
Minister for Agriculture and Water Resources, David Littleproud, released a statement on his website which you can read here.