Both major and non-major banks are refusing finance to those within the adult industry, according to a new report by the industry’s national body, the Eros Association.
The report,
Financial Discrimination against Adults-only Businesses, detailed survey results completed by 24 adult-only businesses including retailers, wholesalers and entertainment providers.
It noted “the prevalence of industry-based discrimination by financial service providers, in particular the rejection of financial services, such as merchant facilities and business loans, to adults-only businesses”.
Rachel Payne, general manager of the Eros Association told
Australian Broker that there had been a distinct rhetoric from the banks in which they did not deal with the adult industry.
“It’s quite disheartening in this day and age that the banks are not keeping up with something that’s a social norm,” she said.
Sixteen of the 24 survey participants claimed recent discrimination by one of the big four banks while four cited discrimination by a non-major.
Jarryd Bartle, policy and campaigns advisor for the Eros Association and author of the report, said that the non-major banks were not necessarily better than the majors in this regard just because the incidents of alleged discrimination were less frequent.
“It is more likely a case that businesses are more likely to apply to the big four and therefore are more likely to document their discrimination,” he said.
The Commonwealth Bank of Australia (
CBA),
Westpac and National Australia Bank (
NAB) responded to calls by
Australian Broker for comment.
“We actively consider the environmental, social and economic impacts of our clients’ activities, and we only lend to businesses and projects where we understand and believe those risks are well mitigated,” a CBA spokesperson said.
Westpac responded similarly, saying that it assessed all applications for loans and merchat facilitites on a case by case basis for the adult entertainment industry.
“However we do not provide facilities, including merchant facilities, to customers known to be operating brothels,” they said.
As part of its due diligence processes, a NAB spokesperson said the bank reviewed all customer applications for banking services on a case-by-case basis taking into account a range of factors.
“In doing so NAB recognises that certain industries carry higher environmental, social and governance risk sensitivity, requiring particularly careful consideration before a decision is made. The adult industry is one of these industries.”
While
ANZ did not respond to
Australian Broker in time for publishing, the Eros Association supplied a letter from the bank sent in November 2015 explaining its stance on providing products and services specifically within the ACT.
“ANZ's general policy is that there are a number of industries that ANZ does not typically service as it considers that these fall outside of the expectations of ANZ stakeholders and may impact ANZ's reputation and standing. As previously advised, ANZ currently considers the adult industry to fall within this category,” the bank wrote.
Of those polled in the Eros survey, 15 were rejected for merchant services, five for a business loan, one for a business debit card, one for a mortgage in relation to freehold property, and one for a personal loan.
Twenty-three applications occurred direct to bank while one occurred through a broker.
Reasons given for the alleged discrimination included:
- That the client was part of the adult industry (14 respondents)
- That adult products have a high risk of chargebacks or fraud (three respondents)
- Ethical/moral reasons (two respondents)
“Findings of Eros’ survey reflect a long trend of industry based discrimination against adults-only businesses in Australia,” the report wrote.
The association said it had repeatedly requested to view the internal policies of the major banks but had been denied access.
“Some possible underlying rationales for industry-based discrimination include the flow-on effect of overseas government policies, moral objections to the industry and perceptions that the industry poses unique financial risks.”
For a qualitative study of a niche sector, a sample size of 24 was suitable as long as it was done correctly, Bartle said.
“Our research participants were sourced online, via our membership databases and at industry events such as Melbourne's FetishExpo. As such, we ensured we sampled a diverse group. The prevalence of adult retail in our sample size reflects the Australian industry generally.”
The Eros Association has roughly 170 members, the majority of which are adult retailers.
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