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FOS Maladministration Lending Handouts and Circular Information

Posted by on in Reserve Bank of Australia
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  1. Responsible Lending Conduct Obligations & Maladministration ...

    www.fos.org.au/.../responsible_lending_conduct_obligations_...Cached
    Responsible Lending Conduct Obligations & Maladministration. ... For some years, FOS has considered disputes regarding “maladministration in lending”. ... In Regulatory Guide 209 (RG 209), the Australian Securities and Investments ...
  2. [PDF] Responsible Lending Obligations and Maladministration in Lending
    fos.org.au/public/download.jsp?id=14492
    Block all fos.org.au results
    File Format: PDF/Adobe Acrobat - Quick View
    For some years, FOS has considered disputes regarding "maladministration in lending". ... maladministration in lending, loan management or security matters. ... Regulatory Guide 209 (RG 209), the Australian Securities and Investments ...
    Many thanks to ARREE for the idea !
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  • doyla66
    doyla66 Thursday, 23 August 2012

    YOU ARE WELCOME Just printing off the Responsible Lending info now.

  • doyla66
    doyla66 Thursday, 23 August 2012

    We have to go to COSL to complain about our mortgage broker, LaTrobe Financial and Peppers. I'd assume they would follow similar guidelines.

  • doyla66
    doyla66 Thursday, 23 August 2012

    Good idea to ask them? I'm wondering too.

  • doyla66
    doyla66 Monday, 05 November 2012

    Terms of Reference Clause 5.1 (a)
    cannot consider disputes solely about commercial judgment
    can consider disputes about maladministration in lending which involve:
    an act or omission
    contrary to or not in accordance with
    a duty owed at law
    or pursuant to the terms (express or implied) of the contract

    The relevant principles are:
    Common law duty to act as a diligent and prudent banker

    Clause 25.1 of the Code of Banking Practice:
    “Before we offer you a credit facility (or increase an existing credit facility), we will exercise the care and skill of a diligent and prudent banker in selecting and applying our credit assessment methods and in forming our opinion about your ability to repay it.”

    Section 70(2)(l) of the UCCC – In determining if a term of a credit contract is unjust, the court may have regard to a number of factors including whether the credit provider “knew, or could have ascertained by reasonable enquiry of the debtor at the time, that the debtor could not pay…or not without substantial hardship”


    We examine the information obtained from the borrower and the assessment of that information. Was there proper assessment of the capacity to repay the loan having regard to the standard of a diligent and prudent lender?

    The application stage
    - What information is sought from the borrower?
    - What information is verified?

    The loan assessment stage
    - Is all relevant information taken into account?
    If maladministration is established in relation to secured lending where a property was acquired, then the disputants would not have entered into the loan.
    In order to put them back into the position they would have been in, they would have had no loan, but no property.
    Therefore their claim includes:
    1.      The disputants’ contribution to the purchase;
    2.      The purchase costs which were not included in the loan;
    3. Payments made on the loan;
    4.       Other holding costs;
    5.       Sale costs.
    We would add back in any benefit obtained while being an owner of the properties, for example:
    not having to pay rent or interest on alternative accommodation;
    rent received from leasing the property and any tax deduction received for an investment property.
    The net amount is the disputants’ claim.
    The sale proceeds are used to repay the loan and these costs.
    If the sale proceeds are insufficient to repay the loan and these costs, then the bank must waive the balance of the loan (if any) and then pay to the disputants an amount sufficient to cover the costs incurred.
     If the sale proceeds are sufficient to repay the loan and the above costs, then notwithstanding any maladministration, the breach of the bank-customer contract has not caused the disputants any loss.

    Bae Bastian
    FOS Legal Counsel
    29 July 2009
    xml.lawfoundation.net.au/ljf/site/templates/powerpoint/$file/FOS.ppt

  • doyla66
    doyla66 Wednesday, 21 November 2012

    Single Mum Trashed by CBA

    I read this thread with interest. To be totally honest I would not too much faith in the FOS finding maladministration unless the case is really extreme and clear cut. They are only there to encourage us to take the EDR route rather than opt for the court option. There is very limited transparency involved in the FOS process and their outcomes are based on a combination of minimal law and maximum wizardry. Just check out their published determinations on maladministration and you will see that the FOS operate like snails in a park and out of the high numbers of cases they have nothing to update on this front. By the time many people opt for the EDR process they are already at destitution point. This means taking the banks on in court becomes next to impossible. While I have to say the FOS staff are very considerate, their roles are the creation of ASIC and the banking sector. FOS may charge approximately $12,000 to hear a case from the bank. The amount of time you get as a client is truely minimal. If the bank has to answer the claims through the courts, you will have far wider Terms of Reference that you can use to build your case, and this will cost the bank far more than 12k. Sure if doesn't go your way it would not be good, however if you will end up bankrupt anyway, your chances are better in the courts than relying on a less than transparent FOS. Thats my experience but its not the same for everyone. If your case is simple and does not involve possible bankruptcy then there is every chance that the FOS will sort it out.

  • doyla66
    doyla66 Wednesday, 21 November 2012

    Thanks for the advice. I have considered that - but I am under my solicitor's direction and advice. Our solicitor has identified and divided our case in two areas of major concern. With one area of concern she is dealing with FOS, (I do not talk to FOS directly at all) and with the other area of concern she is dealing with the AFP. I am sure she has her reasons at this point of time why she has not dealt with the bank directly, but I am sure she will when she sees fit to do so. What do you classify as extreme and clear cut?

  • doyla66
    doyla66 Wednesday, 21 November 2012

    A question??? Doesn't FOS have to report to ASIC and I think to the senate with FOS case updates. I also believe they publish some of these finding of cases too in their yearly report. Is this correct?

  • doyla66
    doyla66 Friday, 23 November 2012

    Single Mum Trashed by CBA

    Hi JJ, that is good. Your solicitor is on the right track. This is exactly what I have been advised to do. Extreme and clear cut is relatively easy to establish and would depend on the contract type, how it is regulated, the events in which the contract was executed, whether one party had advantage over the other, if there was equal bargaining power. Those are the cases FOS do seem to establish maladministration in. Like an adult child getting their 90 year old parent to sign their house over as a guarantee for a business loan. That kind of thing. In less extreme cases it would be where there is less case law established. It is more on the circumstances that lead to the event or execution of the contract. It could involve brokers asking the selling real estate for some letter confirming an unrealistic rental return, it could be eligibility glitches, it could be a whole lot of other things that make up peoples diverse lives. There appears to be a large lacking in effective case law on this front because I imagine the bank wants to negotiate out of this type of case law making it to the public domain.

    And yes FOS does report to ASIC, and there is alot more to the stats than they appear on the surface. I shall look more into and see if there is more information.

  • doyla66
    doyla66 Friday, 23 November 2012

    Single Mum Trashed by CBA

    Hi JJ, that is good. Your solicitor is on the right track. This is exactly what I have been advised to do. Extreme and clear cut is relatively easy to establish and would depend on the contract type, how it is regulated, the events in which the contract was executed, whether one party had advantage over the other, if there was equal bargaining power. Those are the cases FOS do seem to establish maladministration in. Like an adult child getting their 90 year old parent to sign their house over as a guarantee for a business loan. That kind of thing. In less extreme cases it would be where there is less case law established. It is more on the circumstances that lead to the event or execution of the contract. It could involve brokers asking the selling real estate for some letter confirming an unrealistic rental return, it could be eligibility glitches, it could be a whole lot of other things that make up peoples diverse lives. There appears to be a large lacking in effective case law on this front because I imagine the bank wants to negotiate out of this type of case law making it to the public domain.

    And yes FOS does report to ASIC, and there is alot more to the stats than they appear on the surface. I shall look more into and see if there is more information.

  • doyla66
    doyla66 Friday, 23 November 2012

    Tash - Thanks for your information. I currently have 8 cases with FOS, (broken into 4 categories) that have been approved by FOS for investigation. The majority of the loans are mainly full docs. There is also issues with other full docs loans done previously to those too. Our case also invloves morgage security issues/concerns over a few loans.

  • doyla66
    doyla66 Friday, 23 November 2012

    Note- we did not have a broker either. It was the one bank with the one bank manager who did all the loans.

  • doyla66
    doyla66 Monday, 26 November 2012

    Interesting conversation. Hi JJ. I note from your other blogs your problem is with the BOQ North Ward, but you are not a Storm Financial consumer. Above you have mentioned about mortgage security/issue concerns over a few loans. I can assume you are not talking about RMBS, but security of investment properties etc. I am very interested in what your concerns are in this area. Could you please give more details?

  • doyla66
    doyla66 Thursday, 29 November 2012

    I can not at this point of time. I see BOQ has their annual shareholders meeting on Thursday 13th December, 2012.

  • doyla66
    doyla66 Monday, 10 December 2012

    Thanks Tasha for your responses. Knew you were Bank Of Queensland. You confirmed it in the response letter. Thank you - brought a smile to my face and I won the bet. Whoo Hoo!

  • doyla66
    doyla66 Monday, 10 December 2012

    Thanks Tasha for your responses. Knew you were Bank Of Queensland. You confirmed it in the response letter. Thank you - brought a smile to my face and I won the bet. Whoo Hoo!

  • doyla66
    doyla66 Sunday, 17 February 2013

    Single Mum Trashed By CBA

    BOQ...who me..no definitely not!

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