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Parliamentary Joint Committee on Corporations and Financial Services
19/11/2015
Impairment of customer loans

SCHAUMBURG, Mrs Danielle, Private capacity

SCHAUMBURG, Mr Peter, Private capacity

[10:36]

CHAIR: Thank you for attending today's hearing. We have received your submission, which we have numbered as submission No. 95. Would you like to make a short opening statement before the committee proceeds to questions?

Mrs Schaumburg : Good morning, ladies and gentlemen. Firstly, we would like to mention our appreciation for allowing us to have a voice today— for not only ourselves and our family but all the others who are still being victimised by the bank and are too scared to speak up or just do not have the energy to fight any longer. We had been in that position of feeling helpless regarding the banks but finally we are not afraid. We hope that this inquiry brings to light the unconscionable conduct of these big corporations.

For the benefit of those in the audience who have not read our submission, we commenced a loan with Bankwest in 2007 for approximately $3.9 million. It was apparently clear to us that once Commonwealth Bank made the purchase of Bankwest that was the moment in time when our nightmare commenced. The bank systematically set about making our lives a misery. Some of the key points include being forced to change our loan from fixed to variable and being told that if we did not make this change our business would be taken from us, along with the cash and our home that the bank was holding as collateral. To add insult to injury, once we were bullied and intimidated into making this change, we were charged a break-out fee of $246,500. To this day, we have never been given an answer as to how this figure was worked out. During the course of our loan, our 20-year facility was also changed to a one-year facility, as we were deemed a risk. We were also subjected to various valuations—all at our own expense. One particular one that stands out was when the bank informed us that they had engaged the services of CBRE Hotel & Leisure in Brisbane. This would be at a cost to us of $6,500 plus GST. As this seemed unduly high, we made our own inquiries and found that we could have had the same valuation done by CBRE—that is, the same company—on the Sunshine Coast at a cost of $4,500 plus GST. We stated this to the bank and were told in no uncertain terms that they would be using the original valuer based in Brisbane. This valuation came in nearly $1 million less than the previous valuation. On the subject of valuations, I might add that we sold our business under duress in January of this year. The offer that we took was nearly half a million dollars more than a valuation that was conducted one month prior to the offer.

During our time with Bankwest—aka the Commonwealth—we had approximately 13 bank managers. It was basically a revolving door. Each new manager would come in beating his or her chest to get us off their loan books. No sooner did they realise that we really were hardworking and decent people than the next one came in, and then we were back to square one again. It was extremely hard to build relationships when there was such an unusually high turnover of managers. During the tenure of these managers, we still continued to work diligently on the business—whilst dealing with the GFC and two major floods here in South-East Queensland—and to provide on time, every time, all required reporting. We continued to market the business for sale. We never—and I really do mean never—missed a payment of both principal and interest. We maintained good cash flow. We did this all while still trying to keep a smile on our faces for our customers and our families.

To try and explain the heartache and stress that this has caused us, we could never fully do. To have numerous people constantly threaten to take your livelihood, home and dignity et cetera is devastating, to say the least, and many nights of sleep were lost, as well as damaged relationships and illnesses. Many other individuals and businesses have lost everything because of the unconscionable conduct by the bank, which we feel was part of the takeover by CBA not wanting the Bankwest loan portfolio. We were determined not to become another statistic. We basically dodged a bullet and, if not for the support of people like Geoff Shannon from Unhappy Banking and Senator John Williams, who sits before us today, without doubt we would have been another statistic. We as a family are hardworking, decent and honest people, and we just wanted to be treated fairly—which did not happen with Bankwest and Commonwealth.

Thanks again. We are now ready to answer truthfully and further any questions that you may have.

CHAIR: Thank you for that. Can I just ask a couple of points of clarification: you mentioned that you sold in January this year for half a million more than the previous valuation. Was that done at the bank's request? Or was it your own valuation?

Mrs Schaumburg : Correct; it was done at the bank's request.

CHAIR: Was it done by CBRE again?

Mrs Schaumburg : No; I think it was done this time by—was it Herron Todd White?

Mr Schaumberg : Yes.

Mrs Schaumburg : I think it is in our submission, but yes; I think it was by Herron Todd.

CHAIR: You have said that you have at no point in time missed any payments on principal, capital et cetera.

Mrs Schaumburg : Correct.

CHAIR: What was the basis for the 2011 default?

Mrs Schaumburg : It was basically a default on paper, because of the fact that they kept having valuations done and, of course, those valuations kept on coming down. So it was really a default on paper with the loan-to-value ratio. We never missed a payment, ever.

CHAIR: At the time of default, what was the LVR?

Mrs Schaumburg : I cannot honestly give you those figures off the top of my head, I am afraid to say.

CHAIR: I am happy to take those on notice.

Mrs Schaumburg : I would rather give you no answer than the incorrect answer.

CHAIR: That would be great. In your submission, you talk about a number of times where they pressured you to do things like move from the fixed rate to a variable rate. Did they ever explain why they wanted you to move?

Mrs Schaumburg : We were always told that we were just a risk. We were considered a high risk; this is their reason. They never really explained why—apart from being told continuously that we were a risk. This is what confused us because, even with the valuations they gave, they had our home as equity, which they valued at over $500,000. They also had—then, at the beginning; before they took $246,000 off us—$700,000 in cash, plus the business. So we failed to understand why they kept considering us such a high risk.

CHAIR: The banks tell us constantly that they work with people, and that it is not in their interests to see businesses fold. You have talked here about a letter that was sent to the bank: you were looking for some measures to improve your cash flow, but the bank rejected the request. Did they ever say why they rejected measures that you were seeking to put in place to keep cash flow sustainable?

Mrs Schaumburg : No, not really. They kept using that line that you just mentioned: 'We work closely with our customers.' We heard that continuously—all the time. It must be the party line that they give. But we were never really given reasons. They just kept saying no to everything.

CHAIR: They never explained why they thought you were a risk?

Mrs Schaumburg : No.

CHAIR: Interest rates generally went down as a consequence of the GFC. I will leave that there. Regarding the break fee, when you were initially encouraged to change—and you said in your submission you had no idea it was going to be that amount—was it actually disclosed in any of the documentation that was given to you ahead of the contract exchange?

Mrs Schaumburg : No, it was not. We were under the understanding that there would be a small break-out fee, but we never in a million years thought it would be $246,500. That was a complete shock to us.

Mr Schaumburg : That break-out fee kept changing as a result of interest rates coming down. They could not put their hands on their hearts and say what it was, because when the interest rate came down the break-out fee used to go up.

CHAIR: At the time when they wanted you to sign the contract, was it be written anywhere how they would calculate the fee or what the total of the fee may be, even in rough terms?

Mr Schaumburg : It was. I had a voice recording when we approved that. They should have a voice recording of my voice agreeing with that break-out fee of $246,000.

Mrs Schaumburg : I would like to add a point there. When the state manager from Queensland and our bank manager came to the resort—this was all done verbally—an they made those threats to us, there was no mention of a break-out fee anywhere near that. We had already gone too far down the track of having to do that changeover when Peter had that recording.

CHAIR: Time frame wise, how long did you have until your facility expired with them? You had a 20-year facility, didn't you—three years principle only?

Mr Schaumburg : No, we had fixed that interest rate for, I think, close to two or three years. There might have been 2½ years left to run on that facility before it changed back to the variable rate.

Senator WILLIAMS: Just on that issue of the break fee of $246,500, you had no idea. What did you think the break fee was going to be? Did you have some figure or some idea in your head that was saying, 'Look, we're going to have to break this fixed interest contract'? It might have been a three-year contract, you are saying, Mr Schaumburg, and you might have been six months into it. Was there any hint of the size of the fee?

Mrs Schaumburg : To be totally honest, from my point of view, the mere fact that they were forcing us to go from fixed to variable, there was nowhere in my mind even near the idea that it would come to that amount. I did not even think of a break-out fee, because of the fact that we were not asking them to do it; they were telling us that we had to do it.

Senator WILLIAMS: They were telling you that you had to get out of the fixed interest loan or they would sell you up?

Mrs Schaumburg : Yes, they were.

Senator WILLIAMS: In writing?

Mrs Schaumburg : No. A lot of things were really nasty, sneaky stuff. But we did do an affidavit previously, at the beginning of this year, stating that there were three of us in the partnership in a room with Peter Stubley and our bank manager, and that is exactly what they basically said. We did not want to change from fixed to variable because we knew how much we were paying each month. We were comfortable with how much we were paying. We did not know whether interest rates were going to go up or come down. So we said, 'Thank you but no thank you' and they said, 'No, hang on. You're not going to get a say in this. You'll do as you're told; otherwise, we'll close you down' basically.

Senator WILLIAMS: Interest rates did go down over the period afterwards.

Mrs Schaumburg : Yes.

Senator WILLIAMS: What interest rate was your loan fixed at? Can you recall?

Mrs Schaumburg : I am sorry, I cannot recall. I do not have that paperwork here.

Senator WILLIAMS: Was it around eight per cent? Was it around seven per cent? Was it nine per cent? Do you have any idea of what you were locked into for three years?

Mrs Schaumburg : I am sorry I cannot give you that answer right now. You are correct. It did drop, so it did end up being an economic benefit to us.

Senator WILLIAMS: But was it a $246,500 economic benefit to you?

Mrs Schaumburg : We have no idea. How do they even work that figure out when they are taking that money off us? They did not know that interest rates were going to drop so much, either. We have still not had an answer, to this day, as to how that magic figure came about.

Senator WILLIAMS: This is something I will gladly follow up for you, Mrs Schaumburg. For example, if you had saved $100,000 over the next couple of years being on a variable rate then you would still be $146,000 behind but you had a contract with the bank and they forced you to break that contract. Have you sworn that statement?

Mrs Schaumburg : Yes.

Senator WILLIAMS: They said, with witnesses in the room with you, 'If you do not break that contract we will pull the plug on you,' basically.

Mrs Schaumburg : That is correct.

Senator WILLIAMS: Did they say they would take your house?

Mrs Schaumburg : Yes, we have been told many times over the years that they will take our home.

Mr RUDDOCK: On what basis can they take your home if you have a loan?

Mrs Schaumburg : They basically forced us to sell. They wanted us gone now. It was a niche product. It was up in the hinterland of the Sunshine Coast. It had 24 cabins and was in the rainforest. Even the valuers could not put a proper valuation on it. They openly said to us it was very hard to value because there was nothing to compare it to.

Mr RUDDOCK: But you had a contract and they said they were going to break it. On what basis did they say they were going to break it?

Mrs Schaumburg : They said that it would be better off if we went—

Mr RUDDOCK: I hear that but that is not a legal basis. What legal basis did they suggest that they would find your loan impaired and sell you up?

Mrs Schaumburg : You would have to ask them that because we were—

Mr RUDDOCK: No, I am asking you whether they told you.

Mrs Schaumburg : No, we were not given—

Mr RUDDOCK: So you took the view that they might simply because they threatened it, without any idea as to whether there was a legal basis for it?

Mrs Schaumburg : That is correct. Back then, the banks were up here and we were down here as far as we were concerned. We were extremely scared of the banks, especially with the threats that they made. So when they forced our hand and said, 'You have to do this,' we did it.

Mr RUDDOCK: Did you take legal advice?

Mrs Schaumburg : Not at that stage. We have had legal advice throughout the period since with our lawyer Our lawyer just shook his head. We got to a stage in the end where when we brought our lawyer here to the Brisbane with Bankwest, it cost us $1,000 each time and we got to the stage where we just could not afford that any more. They have a lot deeper pockets than what we have.

Senator WILLIAMS: With those valuations you had done, did you pay for them? It is amazing how the company got $6,500 from the bank to value your asset when the same company could have the same valuer do it for $2,000 less?

Mrs Schaumburg : The bank was using CBRE in Brisbane and we spoke to CBRE on the Sunshine Coast because we had a relationship with them previously and they had done a valuation before.

Senator WILLIAMS: Were you ever allowed to see those valuations?

Mrs Schaumburg : They did not want to give them to us but we ended up being able to get those. We did get the last one because that came in at 3.45.

Senator WILLIAMS: Was it difficult for you to get the valuation?

Mrs Schaumburg : Absolutely. We paid for it but they did not want to give it out.

Senator WILLIAMS: I think it is very wrong that you had a contract with a bank, you were on fixed interest and they forced to break that contract and then billed you $246,500, basically holding a gun to your head saying 'get out of this contract or we will pull the plug on you and sell your house and everything'. I think you should be compensated if you saved $100,00 on the following couple of years from the lower interest rate reductions on your variable loan, but you were obviously way behind because you sold the asset and cleared your debt.

Mrs Schaumburg : Yes we did. We paid it out immediately.

Senator WILLIAMS: I think you should be compensated for the cost of that breaking of contract. But anyway, that is something to pursue in the future.

Mrs Schaumburg : It is. It may be that all of that $246,000 may have been used up. I do not know because during our time I had to make payments every month. During the last couple of the years of the loan or at least the last 18 months, I was constantly having to chase the bank up—when is the loan due, what day is it due and how much do I need to have in that account? I was reminding them that they had to take the $6,000 interest out.

Senator WILLIAMS: You had to chase them? You had to do their work to chase the money?

Mrs Schaumburg : In the end it became a bit of a game for me because it was almost like they were wanting me to be one second or one moment late in paying those payments so that would trigger a default. And we could not stand up here today and say, 'We have never missed a payment'.

Senator O'NEILL: This is a very interesting story. I will ask a series of questions based on what you have just said here today. The first one is the threats that you talk about. You imply that these were all verbal threats by telephone. Is there anything in writing?

Mrs Schaumburg : No. They were very smart at this bank. They made sure that it was never in writing.

Senator O'NEILL: Which bank was it?

Mrs Schaumburg : It was Bankwest. It was verbal when they would come up and see us or it would be verbal over the phone. Many a time with our last bank manager, Patrice McEnery, I would say, 'Look, we have not achieved a sale this month,' because I was required to provide a report each month of those who had made inquiries about the business and who had come and looked at it regarding the sale. I said, 'We have not sold.' I said, 'What is going to happen?' She said, 'We will just take your home off you.' It was such a flippant response like that.

Senator O'NEILL: Did you make notes of these conversations?

Mrs Schaumburg : Yes, I did make some file notes on them.

Senator O'NEILL: Would you provide us with those?

Mrs Schaumburg : Sure.

Senator O'NEILL: Thank you very much. Can I take you to the recorded phone call that you had, Mr Schaumburg. Who was that with?

Mr Schaumburg : It was with the loan department within Bankwest.

Senator O'NEILL: You were having this conversation and you did not think it was going to be of such import? Did you take any notes on that day?

Mr Schaumburg : No, I did not take any notes but they said, 'Okay, we are going to record this now as proof that you have agreed to do this.'

Senator O'NEILL: Was it specifically a call only about that particular matter or was it a general negotiation?

Mr Schaumburg : It was general negotiations at first but then when we got to the crux of it, she said, 'I am going to press record now.' She asked a series of specific questions, which I had to answer. They said they had turned it off and that was it.

CHAIR: They obviously wanted to conclude that call and get evidence. Did you ask if you could take that to get a legal opinion on the verbal contract you were about to sign?

Mr Schaumburg : No.

CHAIR: Did they give any indication that they thought you should get an external legal opinion?

Mr Schaumburg : No.

Senator O'NEILL: Did they provide you with written documentation of the things that you had agreed to?

Mrs Schaumburg : I do remember getting some emails through because I even had to ask them when they were going to take that money out so I had money available. How we got that $246,000 was—and this becomes another story so I will try and make it as short as I can—the bank had collateral over our home and over my sister and brother-in-law's home. They sold their home because they had worked on it and renovated it and had really brought it up in value. They honestly thought they were going to get the money, buy another house, do it up and move on. The day their contract became unconditional, the bank told them that they would not be getting the money from the sale of the home but that they would keep that as cash.

Senator WILLIAMS: Are you telling me that your business partners happen to be a sister and brother-in-law?

Mrs Schaumburg : Yes.

Senator WILLIAMS: They bought a house, built it up, gave security to the bank, sold it and got the $700,000 or whatever they got for it with the intention to buy another house and they were forbidden from buying another house using that money and then the $246,500 was taken out of that fixed deposit?

Mrs Schaumburg : Yes, it brought their fixed deposit down to about $512,000 so that is where that $246,500 came from. I might add that then my sister and brother-in-law and their little child back then had to live on the resort in a cabin because they had nowhere else to live.

Senator O'NEILL: Because they could not go ahead?

Mrs Schaumburg : They could not go ahead but they were not told this until it was unconditional.

Senator O'NEILL: So the bank was watching the transaction quite closely and making sure that they got the security that they felt they needed?

Mrs Schaumburg : Yes.

Senator O'NEILL: Did the solicitors advise that that was a possibility at any point?

Mrs Schaumburg : No, never, because we were never given any indication by the bank that they could do that. Vicky and Dave, my sister and brother-in-law, told the bank what they were planning to do.

Senator O'NEILL: So the bank knew because of their admission?

Mrs Schaumburg : That is correct.

Senator O'NEILL: Did you record any of your conversations with the bank.

Mrs Schaumburg : No we did not and that was probably because of lack of knowledge by us. I did not think that you could record something without them knowing about it. There are no recordings, I am afraid.

Senator O'NEILL: I do not believe you can record without people knowing. I believe you can indicate that you are going to record and then record.

Mrs Schaumburg : I am sure they would not have said half the stuff that they said to us if there was a recording.

Senator O'NEILL: So you did not do that?

Mrs Schaumburg : No.

Senator O'NEILL: How did you eventually get copies of the valuations that you were referring to?

Mrs Schaumburg : Just by me being annoying. Many a time it was 'no, you are not having it'. I am like a bull in a china shop when someone says 'no' to me, especially when we had paid for it. If we had not paid for it, I would accept it but not when we had paid for it and at a premium price.

Mr RUDDOCK: You are the politest bull I have ever seen.

Senator O'NEILL: Did they ever get an investigative accountant in to have a look at your business?

Mrs Schaumburg : They tried. What happened was they got to the stage where they rang me. I was providing for sale reports every month. Every quarter, I was giving financial reports—everything they needed on time every time; I made sure I was not a second late with those either—plus also the tax returns each year from our accountant.

Senator O'NEILL: I am starting to see a pattern here that I think is euphemistically called 'early intervention and support' that actually translates to people in business talking in terms of ongoing harassment and irrelevant reporting. Is that a fair assessment of what was happening with you?

Mrs Schaumburg : It was annoying but if the banks tell you to do something, you do it so I just went ahead and provided those as required. It was in our loan documentation that I had to provide it so I kept doing it. We did get a phone call one day saying that they felt they needed a specialist—aka an investigative accountant—to come and have a look at our books. I said, 'Why, when you get all that information you need straight from my MYOB files and also from our accountant?' They said it was a specialist in the area and that they wanted to do that. They said, 'By the way, it will cost you.' I asked how much would it cost and they said about $15,000. I said 'No, you are not doing it.' And then I got threatened that I had no choice and I had to let them in and let them do that. I came up with a story that we were talking with the ombudsman and that we had written letter to the CEO of Bankwest so I was not in a position to let them in until that was sorted and we had followed that process.

Mr Schaumburg : We got a grant from Queensland Tourism Industry Council for access to a business adviser. He came in and essentially reviewed the business itself. He made a report and advised us where we could do better. The only major thing in that report that came up was the fact that we had too much debt. He said the business was running fine. He said we could tweak a little bit here and a little bit there but, apart from that, it was fine.

Mrs Schaumburg : The bank knew that we had conducted that. We let the bank know that had had happened. We since found out from that investigative accountant that it was in fact a receiver. They can call them whatever they like but we dodged a bullet because we would have had the receivers in if we had not just said, 'No, it is not happening.'

Senator O'NEILL: Do you attribute that to luck and timing?

Mrs Schaumburg : I probably would attribute that to stubbornness on my part. Yes, I would say luck would be in it but also the fact that it did not ring true and the fact that I did not want to pay $15,000 for someone that worked for the bank or was working on behalf of the bank to give them the reports that they wanted. So I could not help but think that this accountant was going to be a puppet for the bank.

Senator O'NEILL: So an investigative accountant is somebody you would not consider as an independent expert to come in and assist you with your business; rather, it is a tool of the banks to prepare for taking over the business and putting it into receivership?

Mrs Schaumburg : That is correct. It appears so.

Senator O'NEILL: What do you think the bank owes you in terms of their contractual arrangements that you have had with them firstly?

Mrs Schaumburg : They owe us an apology first of all.

Senator O'NEILL: That was the second point I was thinking of. Personal loss, damages et cetera are different matters. In raw numbers of how this was managed, what do you think the bank owes you if they had honoured the contract in the way that it was undertaken?

Senator WILLIAMS: Surely, the bank would have records of what you were paying at a fixed rate, the length of the term to continue and the reduction in the interest rate when you went to variable. An accountant could work that out in 10 minutes.

Senator O'NEILL: Just like when you want to pay out your car, Senator Williams. You ring up and get a payout figure.

Senator WILLIAMS: Exactly.

Mrs Schaumburg : We tried that, especially after the sale of the business—we would pay back all our money. I thought this was the time to really start gathering information regarding this.

Senator WILLIAMS: You lost your fear.

Mrs Schaumburg : I lost my fear. I remember saying to our last bank manager when she made another threat about us losing everything—very flippantly, I might add—'I used to be very scared of you. I am not scared of you any longer. Bring it on.'

Senator O'NEILL: I have a question about your claim towards the end of your statement regarding the bank deliberately, in your view, attempting to construct a default by delaying communication with you and getting to the point where they were relying on you to initiate communication about how much was owed, when and where. We were just at the point where you were telling me about when the communication stopped regarding what you were supposed to be paying. What date was that?

Mrs Schaumburg : It would have been a good couple of years before we sold, wouldn't it? A good 18 months.

Mr Schaumburg : Yes.

Mrs Schaumburg : It was, probably, when our last bank manager, relationship manager, came in. It was just constant. Every month I had in my diary—I knew, always, it was around the 16th, 17th or 18th of each month but I needed to make sure there was enough money transferred across to make sure that loan could come out as well as the $6,000 principal. Many a time, the principal did not even come out and I had to keep emailing him, up to a week later, saying, 'You still haven't taken our principal out.' It is not very much but for next month we would be paying interest on that $6,000 that they should have taken off. It is a lot for small business.

Senator O'NEILL: It sounds like you were meticulous in undertaking that.

Mrs SUDMALIS: Was your sister and brother in-law's house listed as an asset when you negotiated your first loans with the bank?

Mrs Schaumburg : Correct; yes, it was.

Mrs SUDMALIS: Did they hold the mortgage documents?

Mrs Schaumburg : They had the mortgage documents but at no time, when they were selling that house, were they expecting to buy another one to improve in value again. They were very honest, my sister and brother-in-law, in telling the bank, 'This is what we plan to do.' No mention was made that they could not do that, until the day it became unconditional. Then they were told they could not have their money.

Mrs SUDMALIS: That is the fault position, not the fact that they seized the funds. The fault was that they were not informed they would have no discretion over the funds gained, from the sale, if their house was listed as an asset to get the loan in the first place. That is a different avenue for you to complain about and I think it is an appropriate avenue, still, for you to complain about.

Mrs Schaumburg : Thank you.

Mrs SUDMALIS: Changes of mortgages from fixed rates to variable sounds like they requested you to change your mortgage, which is why the break-out is so considerably high. You have discharged one mortgage and taken on another. Do you recall if the paperwork you signed, at that time, was a totally different document?

Mrs Schaumburg : It would have been, I am sure. It was not done on the day they came and saw us and said, 'This is what we are going to do.' We did get subsequent paperwork. I would imagine it would have to have been different, because of the fact that—

Mrs SUDMALIS: That is your other avenue for formal complaint, that it was not fully explained to you that you were busting one mortgage to take out another one. That is why the break-out fee is so high.

Mrs Schaumburg : Yes; thank you.

Mrs SUDMALIS: The specified date of payment should have been at the same time they recorded your voice with the bank. They should have said, The payment will be taken out of your account on X date,' and that should have been on their part of the contractual agreement and the interest rate should also have been informed to you. That is another form of formal complaint. That should have been in your contract. That is standard banking. Not only have they done quite the wrong thing, morally, but it appears they have missed steps, professionally.

Senator WILLIAMS: Probably on purpose.

Mrs SUDMALIS: I am not going to go that far, but you never know. When you said that you bluffed this manager and that you had contacted the ombudsman, did you contact the ombudsman?

Mrs Schaumburg : Yes.

Mrs SUDMALIS: Is that still in investigation?

Mrs Schaumburg : No. In the end, they did not do very much for us. It all got too hard for them. What happens is, they go to the bank with their right of reply and we keep getting back, 'The bank hasn't responded. We are going to give them another two weeks,' or three weeks or whatever they give. It comes back again, 'They still haven't responded.' In the end, the ombudsman wrote to us and said, 'We have exhausted everything. We cannot do anything more for you.'

Mrs SUDMALIS: This has happened to a number of other people I know of, anecdotally. Is it possible for you to give us the paper trail that goes along with this? While it is not directly related, here, it opens the door on another issue that is of equal significance.

Mrs Schaumburg : Yes, of course. I have a big box full of paperwork. We do have that.

Mrs SUDMALIS: Thank you.

Mrs Schaumburg : Once we had exhausted our time with the ombudsman we started writing to the CEO of Bankwest, stating our case, because we were beating our heads against the wall, here in Queensland, at that level. If it had not been for the support of Senator Williams we would have lost everything, I have no doubt.

CHAIR: In the correspondence to the FOS did they, at any time, flag that their upper limit is only half a million dollars and that it takes the agreement of both parties if they are to consider a case above that?

Mrs Schaumburg : Something makes me feel I did know about it. Whether that was in their paperwork or whether I had been told that by someone else, I am not sure, but I can check that paperwork.

Mr RUDDOCK: If we are dealing with the bank and raise your matter, and the bank says to us, 'These are privacy issues and they relate to our clients' affairs and we cannot discuss them with you,' are you more than happy for us to raise those matters with the bank and for the bank to discuss your affairs with us?

Mrs Schaumburg : Absolutely, please. We would be very grateful.

Senator WILLIAMS: Mr and Mrs Schaumburg, there is an Australian bankers' code of conduct. Bankwest signed up in 2004, we heard yesterday from the Australian Bankers' Association. The ABA's code of banking practice sets standards for fairness, transparency, behaviour and accountability beyond the legislative requirement that customers, individuals and small business can expect from the banks. Banks are committed to acting fairly, responsibly and transparently. Would you say Bankwest abided by that code?

Mrs Schaumburg : Absolutely not. We did not have a problem with Bankwest at the beginning. It was when we got this lovely letter from the Commonwealth saying, 'We are about to take over Bankwest. Nothing is going to change for you. We still want to have the relationship with you.' I have even kept that letter.

Mr RUDDOCK: Frame it.

Mrs Schaumburg : Yes! It did change. It changed for many of us.

Mr RUDDOCK: Ann would like a copy.

Mrs SUDMALIS: It is the first evidence we have had saying that nothing is going to change, when for many people it absolutely did.

Mrs Schaumburg : It did. It absolutely changed. What the banks want you to think is, when they start to trigger these defaults on paper or threaten to take your home or everything off you, they want you to think you are the only person. First of all, they want you to think it is your fault and you are the only person who has this problem. You start to talk to other people—at the previous Senate inquiry, the Unhappy Banking group and things like that—and you think, 'Hang on a second. Maybe it is not us.' It causes you to question how you do business. Are you a good business person? Are you good person? It makes you realise they are just bullies.

Senator WILLIAMS: There is a way you can lodge a complaint for a group that oversees that Australian Bankers' Association code of conduct. I am sure they would be interested to hear your story.

Mrs Schaumburg : Thank you. Thank you so much for listening to our story.

Mr Schaumburg : There is one more thing I would like to bring up. We had one meeting with Peter Egan and Ali Mohamed. Ali was our bank manager in Brisbane. They came up and saw us, one day, to have one of these discussions with us. It was about two weeks later that Danielle rang up Bankwest to talk to Ali, and she was informed that he had gone back to his main job. She said, 'What's his main job?' and they said, 'He's a receiver.' We were told that he was going to be our bank manager going forward, so that highlights some other inconsistencies with regard to the bank.

Mr RUDDOCK: He is multiskilled!

Mr Schaumburg : Multiskilled, yes; that is right.

Mrs Schaumburg : We were told that he was on secondment once we pushed it, because I said, 'Where is he? What's going on?' and they said, 'He's gone back to his proper position.' I said, 'What's that?' and they said, 'A receiver.' I said, 'What receiver is that?' and they would not tell me. They said, 'He was on secondment, and it is normal practice for receivers to be seconded to the banks.'

Senator WILLIAMS: Normal practice when you are cleaning out the book!

Mrs Schaumburg : Yes, exactly.

CHAIR: I come back to Senator Williams' comment about the code. We are told by the Australian Banking Association that that code is advertised widely and that pamphlets about it are in every branch of the bank. Were you aware of the code?

Mrs Schaumburg : I have not read it. I did not know it, but, to be totally honest, when you are dealing with such a big corporation and you are an honest person yourself, you assume that other people, especially at that level, would be the same.

CHAIR: But were you aware that you could make a complaint about their conduct through the code?

Mrs Schaumburg : No.

CHAIR: Would you know how to go about it?

Mrs Schaumburg : I will be googling when I get home.

CHAIR: The second thing is the bank said you were a risk. It could not define it, but the bank said the business was a risk. You met all your payments, you sold the business for more than the last valuation and managed to clear the debt. With the person who bought the business, is it still running successfully?

Mrs Schaumburg : Absolutely.

Senator O'NEILL: They got a loan with Bankwest!

Mrs Schaumburg : I do not think so.

Senator O'NEILL: You mentioned Mr Geoff Shannon and Unhappy Banking. I am interested in what happened between December 2013, January 2014, and November 2014. In your testimony, you talk about how you held this whole process at bay to get the sale done quickly. How did you achieve that? Who is Mr Shannon?

Mrs Schaumburg : Basically, Geoff Shannon was the founder of Unhappy Banking. We dealt with him very early on in the piece, when we were having major problems before the previous Senate inquiry. He was the one who made us realise, 'Hang on, it's not just us. It's happening to a lot of other people.' Geoff did not take an active role at the end of this sale process or at the end of this process. I used to run things by him and advise him. Who did take an active role was Senator Williams, insofar as we had many threats and deadlines. For example, if we did not sell by January 2014, they were going to appoint their own agents and appoint their own whole massive team to achieve the sale within three months, and it was basically going to be a fire sale. The only thing that stopped us from going down that process was writing to the head of Bankwest and speaking with Senator Williams about our problem, and he kindly helped us as much as he could with that.

Senator O'NEILL: Direct communication with a senator and with the CEO of the bank was the only way you could prevent the lower-down processes from proceeding to put you through a sale?

Mr Schaumburg : In our view, yes.

Mrs Schaumburg : And threats of the media.

Senator O'NEILL: That is fairly extreme action on your part.

Mrs Schaumburg : We had no choice, because we tried it at the ground level with our managers here in Queensland and here in Brisbane. We tried everything. We are both from a Defence Force background, so we know a chain of command and we are used to following that. It is not a case of saying, 'We didn't get what we wanted, so we're just going to go straight to the top.' We did follow processes and we had no choice in the end but to go to those levels.

Senator O'NEILL: Thank you very much.

Mrs Schaumburg : Such a pleasure. Thank you.

CHAIR: Thank you for providing your evidence today and for your submission, and for sticking with it. It provides a really good benchmark case for a positive outcome where people are actually allowed to follow a business through rather than being sold off in a hurry.

Mrs Schaumburg : Thank you very much.

CHAIR: We have asked you to take a number of things on notice. If you could come back to the committee by 27 November with that information, we would much appreciated that.

Mrs Schaumburg : Sure; no problem.

Proceedings suspended from 11:19 to 11:32