Banking expert witnesses in high demand: Navigating financial disputes amidst economic challenges in Australia
In the past year, businesses have faced tighter financial conditions, with escalating interest rates and challenged consumer demand amidst cost-of-living pressures. In this more difficult business landscape, crimped cashflows and rising insolvencies have, in some cases, led to financial disputes.
Against this backdrop, our team has witnessed an increasing number of dispute resolution and litigation services requests. Demand for our banking expert witnesses has risen as businesses and their lenders work through challenges impacting the status quo.
Changing dynamics for lenders
While lenders have supported their borrowers well through the COVID-19 period under the Banking Code of Practice, there are new pressures. A number of disputes are legacy issues from yesteryear – put on the backburner during COVID-19, but a new cohort of disputes is arising, given the changing economic situation.
Interest rates have been rising and as the cost of borrowing increases, businesses are grappling with more difficult loan servicing requirements. Simultaneously, inflation-led cost rises, and consumer demand challenges have impacted earnings, adding to the financial stresses. Alongside this comes an increasing prevalence of disputes.
While most disputes are settled at an early stage and directly (or occasionally via arbitration), many matters still go to the courts.
Crucial insights from banking expert witnesses
Enter banking expert witnesses. Armed with a nuanced understanding of lending assessment practices and criteria, responsible lending, independent experts are now playing a larger role. Experts supply crucial perspectives on the interplay between regulatory requirements, lender behaviour, and business challenges – and are helping stakeholders navigate the complexities of disputes. Insights are required to cover the loan assessment and approval processes, the documents showing the financial health of businesses at the time, and the reasonableness of resulting loan terms.
Expert witnesses in legal practitioners’ strategy
The demand for these experts underscores their role as impartial observers, reviewers, and critics in resolving disputes. Recognising the evolving nature of banking disputes amidst economic challenges, legal practitioners rely on expert witnesses to bolster their cases. The Australian judiciary, in turn, is willing to consider expert opinions as valuable contributions to the resolution process.
The confluence of increasing interest rates and declining earnings has created the conditions for rising disputes between banks and business borrowers. Untangling this intricate web of challenges, banking expert witnesses have emerged as helpful guides, offering clarity and impartiality and contributing to a more informed and equitable resolution process.