The Unpleasant Truth About Australian Banking

Neil Hermes Story

My name is Neil Hermes. This is my story relating to the bank’s misconduct and its devasting effects to my family and life.

In 2007, I signed a loan contract with Bankwest in order to purchase a tourism property at Jervis Bay on the south coast of NSW. This was an important tourism property, and I was borrowing 50%, which is normal in the tourism industry.

It was not until April 2009, that Bankwest required us to change the way we operated the business and appoint new lawyers and accountants, and required us to provide the bank with a new valuation. This meant the bank breached the loan contract and treated my wife and me very disrespectfully. This was unacceptable as we always had a good record with the bank and had always paid our interest on time.

The changes forced on us by the bank destroyed our business and was served with a demand by Bankwest, which meant I was bankrupted. I cannot believe that a major bank could treat its customers so poorly when there were provisions in the loan contract to protect small businesses and people like me.

In October 2021, I wrote to Commonwealth Bank again and asked it to review my case and find my missing securities. Again, the bank did not act in good faith which concerned me. Until recently none of Commonwealth Bank’s employees could deal with disputes that should have been addressed as services out in the 2004 Code, which was not included in the documents handed to me.

This is the details of my experiences with the bank.

Since 1991, I have operated a successful tour business in Australia titled Discovery Ecotours. The business ran tour operations across three locations at Ayers Rock, Darwin/Kakadu National Park, and Jervis Bay.

On 23 September 2002, my company (formerly Australia Ecotours Pty Ltd, Discovery Ecotours Holdings Pty Ltd, Discovery Ecotours (QLD) Pty Ltd) was registered as a Proprietary Company with the Australian Securities and Investments Commission (ASIC).

My company had a lease-to-buy contract for the purchase of staff headquarters and depot in Rapid Creek Darwin.

On 12 February 2007, my company purportedly (in its own capacity or in the capacity as Trustee) acquired the leasehold over property ‘Christians Minde’, Sussex Inlet, Commonwealth Territory (surrounded by NSW), Jervis Bay for $1.4M with Bank of Western Australia Limited (‘Bankwest’) providing $810,000 loan towards the purchase. The property contained Northern Guest House, Self-Contained Flat, Southern Guest house, Manager’s Cottage, Derelict Flat, Boatshed, Workshop/Storage Area, and Grounds.

The 2007 financial statements showed that the trading income increased from $2.18M to $2.54M from 2006 to 2007. The gross profit from trading increased from $1.879M to $2.21M from 2006 to 2007. The net profit before income tax increased from $236k to $429k from 2006 to 2007. This meant that my company was performing well with growing revenues and profits.

Bankwest provided $810,000 towards the purchase of Christians Minde in February 2007.

It appears that Bankwest was purportedly unaware of there being any Trusts and that my company held the security in a capacity as Trustee thereof. Bankwest also had no fixed or floating charges over any Trusts.

Bankwest sought to rectify the Credit Risk Review findings with the recommendation, among other recommendations, requiring a 3% Penalty Rate above margins to apply until I provided the financial statements clarifying the Bank’s facility and corrected Debtor’s name.

Bankwest’s Credit Risk Review indicated that general account conduct had been unsatisfactory over the preceding 12 months, that the loan could be high risk or impaired and that the credit rating has deteriorated.


Martin Darcy, at the time, was a 50% shareholder and Director of my company. As per the Credit Risk Review, he resigned as Director and requested that his Guarantee be released. Bankwest declined to release Martin Darcy’s Guarantee considering he was still a shareholder.

On 13 March 2008, Bankwest provided a loan extension to the Company for $168k to part purchase Odyssey Tours. Bankwest noted my company’s excellent relationship, record, company structure, and reporting.

On 8 October 2008, Commonwealth Bank acquired Bankwest.

In December 2008, my company began its internally funded $500k improvement plan for the Resort.

On 24 April 2009, Bankwest issued the Company with a Notice of Breach of loan conditions.

In June 2009, on the back of the Bankwest Credit Risk Review and pressure to reduce loans, the Company commenced looking for alternative lenders to refinance the existing Bankwest loan facilities.

For the year ended 30 June 2009, my business turnover was $2.72M, and recorded a net profit of $450.5k. The turnover and net profit in 2007 were $2.54M and $429.5k respectively, illustrating the Company’s continued strong financial performance.

On 6 August 2009, I received Commonwealth Bank’s Letter of Offer for a $850k facility to payout Bankwest and for resort improvements. On the back of the offer, my company makes financial commitments for further resort upgrades ready for the 2009 summer season.

On 26 August 2009, Commonwealth Bank withdraws its loan offer, which was done so at the direction of Bankwest. Due to the Commonwealth Bank withdrawing its loan offer, resulted in significant losses due to financial commitments on the Resort upgrades along with losses from summer season deferral.

At the end of 2009, due to significant pressure from Bankwest, we suffered from:

  1. cost of numerous meetings, phone calls, and emails;
  2. cost for numerous updated accountant reports;
  3. cost for valuations;
  4. default charges and interest;
  5. the opportunity cost of seeking alternative finance;
  6. cost for changing accountants;
  7. losses from lost trade in the 2009-10 summer; and,
  8. the significant emotional toll on my family.

On 31 March 2010, due to Bankwest pressure and Commonwealth Bank pulling refinance funding, I had to place my company into voluntary administration.

As a consequence of the voluntary administration, valuable exclusive licences for tour operations at Ayers Rock, safari campsites in Kakadu National Park, and safari campsites in Litchfield National Park were lost.

From mid to the end of 2010, we received demands for payment from Commonwealth Bank for loan fees for the withdrawn offer in August 2009.

On 31 January 2011, I received Bankwest’s Demand for Payment for $1.16M, even though my business was in administration and the Christian Minde leasehold and business were owned by my company.

On 1 February 2011, due to Bankwest demands, I put my family home on the market for sale. Two days later, I made a formal offer to Bankwest, via my lawyers, but Bankwest did not respond.

On 26 March 2011, under significant financial duress, I accepted an offer for my family home.

On 1 April 2011, the administrator had Christians Minde valued, with a resultant value of $1.1M. Only two weeks later, I went bankrupt. In a run-down state and with no trade the administrator then sold Christians Minde for $740k.

On 21 October 2012, ASIC deregistered my company.

On 7 May 2018, I submitted a complaint to the Australian Banking Royal Commission, then on 18 May to Commonwealth Bank and Bankwest.

On 16 July 2018, Commonwealth Bank and the next day Bankwest rejected my compensation claim. A Bankwest employee told me that it influenced the Commonwealth Bank refinancing decision and that no refinancing would be permitted by Bankwest from any other source. It was the group organisational structures that placed the debt facilities in breach, even though there was no financial default. The group organisational structure was the same at the time of original finance (February 2007) and at loan extension (March 2008), and it was Bankwest’s incompetence that created the debt facility breach in April 2009.

Since then, I have filed many complaints against the banks, AFCA, and other regulators. Our matters with Bankwest and CBA are still open today.

We now have little to no assets because the Bankwest and Commonwealth Bank:

  1. provided loans without considering the overarching structure of the business and how it interacted;
  2. created debt facility breach by way of not being a prudent and diligent lender and overall incompetence due to a lack of understanding of the overall group structure;
  3. bullied, intimidated, and put undue pressure on us;
  4. breached the loan contracts by withholding documents pertinent to our rights;
  5. did not act in good faith or ethically when influencing refinancing, which caused material losses in lost trading, and under sale of assets; and
  6. caused material financial losses and irreparable reputational damage.

The forensic accountant’s financial loss report states that the result of the assessment of my net past financial loss is $17.8M on a pre-income tax basis.

I attempted to explain the serious allegations of misconduct and practices by these banks which were more serious than the practices by Bernie Madoff, who was America’s greatest fraudster. However, I have not received any response nor an explanation of why the banks destroyed my business and my family’s financial lives. I will still keep going filing complaints until the banks provide me with fair compensation and an apology.

I have also contacted other small businesses and farmers who were suffering from the bank’s misconduct and we have reviewed the relevant documents which support our points:

The 2004 Code of Banking Practice has been found to not meet the Internal Dispute Resolution (IDR) procedures in particular when a customer wants to resolve disputes free of charge because the ASIC guideline which we now know was ASIC Regulatory Guide 165 (2001) which the bank must comply with already having been omitted.

The bank did not meet the timeframe as set out in clauses 35.3 and 35.4, nor did it provide us, complainants, with written reasons (clause 35.1(d)).

The bank did not prominently publicise the Code in branches (clause 37.1(a) especially in regional and rural areas (as noted in the CCMC’s Bulletin 4).

The bank did not meet the standards in AS 4269-1995 Standard (clause 35.1(b) nor could they comply with clause 37.2a.

We expect the bank to meet these requirements services in clause 2.1(b)(i), especially as banking services which are defined as ‘any financial service or product provided by the bank to you’.

We did comply with the definition of small businesses, as stated ‘a business having less than 20 fulltime employees and equivalent people’. Therefore we believe the bank did not ‘comply with all relevant laws relating to financial services and products (Clause 3.1), the bank did not provide us information in plain language (clause 2.1(d) nor act fairly or reasonably towards us (Clause 2.2). The bank directors did not ensure its staff and authorised representatives were trained (clause 7(a)(b) and it did not comply with clause 34(b)(i)(ii).

In the event that the bank has not complied with its responsibilities and rule of law, ASIC must withdraw or suspend Commonwealth Bank’s license until its misleading statements and dishonest practices are dealt with appropriately by its directors. I do expect the bank and regulators to comply with the standards, the Code, and all relevant documents so that our rights should be protected.

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