The fairness of the "all monies" rule and its variants in banking animated the Hayne royal commission on Friday.Commissioner Kenneth Hayne took up the gauntlet, challenging Alastair Welsh, Westpac's head of commercial banking, over "the unfairness that was worked to the [bank's] client by insisting on that retainer of $100,000," in connection with a tourism venture in northern NSW.Settling on a theme for his third round of hearings on business lending, Hayne put it to the Westpac executive that "it's the larger issue of, firstly, all accounts instruments, whether they're all accounts mortgages or all accounts guarantees, all moneys instruments, and cross-collateralisation generally."How, if at all, is a banker to determine - by what criteria is a banker to determine whether insisting on the letter of the law and insisting on the letter of an all moneys instrument - is fair to the small business enterprise?" Hayne asked Welsh.The banker responded: "I think what's important is that you give flexibility to the business, because they've got working capital. You give the business flexibility."I think the trade-off is the fairness of the all moneys with the flexibility that the business owner gets so that they can make calls; because they're making calls daily on how they do things, they're looking at opportunities where they may want to buy more stock, do things."We're also seeing situations where businesses may have a number of entities. They may be buying and selling things within one entity, starting up a new business or a new channel, and often they do that through different companies. So it allows them an ability to look at the holistic nature of their business, albeit that they've got different legal entities and different structures. So I think there's a trade-off there between flexibility and fairness."Welsh added: "you could say one of the outcomes here would be you want to [share] a lot more detail and you want to explain a lot more. "That would add some complexity for [business borrowers], and I think you would want to be very thoughtful about the trade-off there."Brett Perry, general manager for restructuring and credit management at Commonwealth Bank will be one witness examined today along with the bank's chief credit officer Peter Clark.