‘Excessive’ security agreements by banks need investigating – lobby group

Banks’ general security agreements could come under scrutiny from the Commerce Commission.

It is a major area of concern raised by lobby group Banking Reform Coalition when it recently met with the commission.

Coalition head Kent Duston says in many cases the security agreements seem to extend well past the amount being borrowed and to cover assets that are beyond the immediate security.

“If a bank decides it doesn’t want to extend credit further to a borrower, the general security agreement has everything wrapped up making it exceptionally difficult to go to any other lender because there is nothing for them to work with.”