'My neck is on the line': Sales pressure blamed for ANZ's gelato loan

An ANZ banker who granted a $220,000 loan to a couple who set up a failing gelato kiosk later told the bank he felt compelled by a "culture of sales pressure" to write the loan, the royal commission has heard.

In 2015, the unnamed couple applied for finance to establish a kiosk with an "intimate, romantic and sophisticated atmosphere" in the busy walkway of a Westfield shopping centre in Western Sydney.

ANZ had a goal to "relentlessly acquire" new small business clients, the royal commission has heard.
Photo: Supplied

They later complained to the Financial Ombudsman, who determined the loan should not have been made because it could not have been serviced.

Senior counsel assisting the commission, Michael Hodge, QC, described the business plan submitted by the couple as "slightly comical", populated heavily with clip-art. "It looks more like a marketing pitch than a business plan," he said.

Under questioning from Mr Hodge, ANZ executive Kate Gibson on Wednesday admitted the ANZ banker in question had failed to demonstrate the care and skill of a diligent and prudent banker in writing the loan - the standard enshrined in the Banking Code of Conduct.

'Culture of sales pressure'

But, Ms Gibson said, this was not because the loan could not be serviced by the couple - including by using the husband's independent income - as the Ombudsman had found, but because of significant data entry errors in the paperwork.

Mr Hodge led Ms Gibson through a performance review history of the banker in question - who has also not been named.

The banker's reviews showed that in 2014, prior to the couple's loan, the banker had missed a sales target for "new to bank" lending by just one loan.

At the time, ANZ had a goal to "relentlessly acquire" new small business clients, the commission heard.

By the end of the year, the banker was hitting this sales target, and was promoted and described in his review as a "role model for the team".

But things later became "unstuck" for the banker, according to Hodge. During a disciplinary process against the banker conducted last year about two loans written in 2015, the banker complained to ANZ that "in the excitement of closing new deals, a culture of sales pressure that you felt weighed heavily at the time".

Mr Hodge questioned Ms Gibson whether this "relentless" focus on acquiring new business clients "may have contributed to poor practices at ANZ".

"I don't accept that it follows that it led to poor practices," Ms Gibson replied. "I think that it is the case that the culture in small business was one of wanting to perform."

“I don’t accept the characterisation of being under sales pressure. But I accept that that’s what the banker has said that they felt they were under."

ANZ has since revised its bonus incentive structures for bankers to give less weight to hitting sales targets, as recommended by the Sedgwick review.

The business plan submitted by the couple for its gelato kiosk was "slightly comical", said senior counsel assisting the commission, Michael Hodge.

The role of brokers in bringing in new small business lending to banks has also come under scrutiny.

In the same gelato case study, the commission heard details of a chain of emails between the ANZ banker and a broker acting for the potential franchisees.

"Mate, my neck is on the line," complained the broker, who was set to receive a commission if the loan was written.

Mr Hodge said the exchange showed the broker was "obviously pushing to get this loan made".

The hearings continue.