Labor pledges stronger support for farmers

Federal Labor leaders have promised more stringent controls on banks to help farmers in financial distress.

Labor would go further than the banking royal commission recommendation not to charge default interest on farm loans during natural disasters, Labor leader Bill Shorten said in a joint statement with agricultural spokesman Joel Fitzgibbon and financial service spokeswoman Clare O'Neil on Sunday.

"If elected, Labor will put the clamp on farm foreclosures, make banks come clean on their treatment of farmers if they fell behind in their loan payments, and significantly increase the compensation caps for farmers affected by misconduct," they said.

Labor would review treatment of distressed loans, by looking at cases where default interest was charged by banks to farms for the last five years.

Labor's scheme would consider the fairness of each case and if a bank "hasn't acted in line with their obligations" in charging default interest, steps would be taken to determine whether any compensation should be awarded.

Under a new regulatory process for banks to seek a pre-approval for farm foreclosures, banks would not be able to kick farmers off their land until they have received regulatory clearance ensuring banks are acting in line with community expectations.

Labor would double the Australian Financial Complaints Authority's compensation cap for farmers from $2 million to $4 million, also making it available for non-financial loss in recognition of the strain that the misconduct has put on lives - up from the current cap of $5000.