Shadow ledgers

On 16 August 2000, Bruce Ford gave evidence to the Australian Federal Government about the shortcomings of banks’ practices of maintaining “shadow ledgers” in place of borrower’s account statements.

The report from the Parliamentary Joint Statutory Committee on Corporations and Securities concluded:

“…the need to hold an inquiry into ‘shadow ledger accounts’ represents a failure of the Commonwealth Bank to resolve some customer relation disputes internally… the Committee has investigated… the creation of shadow ledger accounts, it is evident that this practice is not limited to the Commonwealth Bank.”

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In a press release, Senator Murray stated:

“Consideration must be given to requiring banks to regularly provide statements to ‘shadow ledger’ customers,” he said. “If some banks are not providing customers with this information, their customers would be kept in the dark – completely unable to track their increasing, or decreasing debt.”

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Following the inquiry, on 23 August 2001 Senators McGauran and Conroy made the following speeches in the Senate re the shadow ledger issue;

Senator McGauran: “the latest incident involving banks is with regard to shadow ledgers, touched on by Senator Conroy. This is a very troubling area, which the Joint Committee on Corporations and Securities has looked into. I believe that the act of using shadow ledgers, undertaken by some of the banks anyway is highly suspicious and ought to be brought to a grinding halt”.

Senator Conroy: “There is perhaps an attitude from the bank that having survived the scrutiny of a parliamentary inquiry, the issue can be swept back under the carpet.

… What customers are being told by the government is that, after pursuing the banks for years and getting no response, they must now use the same mediation process that previously failed to address their concerns.

The whole issue of shadow ledgers demonstrates the need to improve the process of handling disputes.”.