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The UCCC did not apply to consumer loans for investment in residential property - says ASIC

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Copy of letter we received from ASIC .  Did you all get a similar spiel? I've underlined some parts of the letter  ..


Thank you for your letter dated 24 July 2012 addressed to Mr Greg Medcraft, Chairman of the Australian Securities and Investments Commission (ASIC), raising concerns about:  MortgageEZY Pty Ltd ACN 066 631 169 ACL393457 (MortgageEzy); La Trobe Financial Services Pty Limited ACN 006 479 527 ACL 392395 (La Trobe Financial); and RHG Mortgage Corporation Limited ACN 065 912 932 (RHG), formerly known as RAMS Mortgage Corporation Limited.  

 

The Chairman has asked me to respond on his behalf.

 We understand that you applied for 'low doc' loans between May 2007 and January 2009. You have claimed that you were approved for loans that you could not afford to repay on your income. You have commented that the lenders did not contact

you, or your accountant, to verify your income before approving your application.  Further, the lenders have not provided a copy of all your loan application documents despite your requests. 

 

ASIC records indicate that we have not received a report of misconduct from you about this matter previously. ASIC appreciates receiving information about credit providers and credit assistance providers from consumers as an important source of intelligence. This information helps us to identify patterns of misconduct in the credit industry, and whether any alleged misconduct may breach a law that ASIC administers and warrant a regulatory response.

 

 ASIC's regulation of credit industry participants

The regulation of the consumer credit industry has been transferred to ASIC from 1 July 2010 when the National Consumer Credit Protection Act 2009 (Credit Act) came into effect.  The Credit Act contains responsible lending provisions that oblige credit providers and credit assistance providers to make reasonable enquiries and verify a consumer's financial position prior to the provision of credit. Further, they must, if requested, provide the consumer a copy of the assessment that the credit contract is 'not unsuitable' for the consumer.

 

 The Credit Act also contains the National Credit Code (NCC) that provides consumer protections, such as the ability to apply to the lender for loan variation on hardship grounds, or to apply to the Court to annul or reduce unconscionable early termination

fees.  Before 1 July 2010, consumer credit was primarily regulated by the states and territories under the Uniform Consumer Credit Code (UCCC). ASIC had a limited role in relation to the regulation of credit through the prohibitions on unconscionable

conduct and misleading and deceptive conduct contained in the Australian Securities and Investments Commission Act 2001 (ASIC Act).  The provisions of UCCC are now reflected in the NCC with some additional consumer protections. In that regard, some loans entered into before 1 July 2010 are now regulated by the NCC depending on whether or not the loan was regulated by the consumer protections in the UCCC. The UCCC applied to consumer loans for domestic purposes.

The UCCC did not apply to consumer loans for investment purposes or for investment in residential property. Where the UCCC applied to a loan before 1 July 2010,the NCC will continue to apply to the loan. Where the UCCC did not apply to a loan, the NCC will not apply to the loan.

 

ASIC consideration

 

ASIC has considered the information you have provided against our regulatory  responsibilities for credit providers and credit assistance providers.  Given that your loans were entered into between May 2007 and January 2009, the responsible lending provisions under the Credit Act do not apply to your loans.

 

Unfortunately, your letter does not contain sufficient information for us to ascertain whether the protections in the NCC may apply to your loan. For this reason, you may wish to lodge a report of misconduct with ASIC directly through our online form,
available at www.asic.gov.au/complain   The additional details that would be helpful to us generally include:

# the date you entered the loan;

# the loan amount;

# the purpose for obtaining the loan, such as to purchase your home, an investment property, or other investments;

# copies of all documents relating to the loan, such as any statements of advice, loan application forms, or loan contracts;

# the names and roles of any parties involved in arranging or providing the loan, such as mortgage brokers, financial planners, or accountants; and

# details of any other loan applications you may have made at the time, and whether you have refinanced the loan since that time.

 

 It would also be helpful for ASIC to know whether you have applied to vary your loan on hardship grounds, or lodged a dispute with the lender's internal or external dispute resolution service, or commenced Court action in relation to this matter, as well as

any outcome of these actions.  We would then be in a position to consider whether regulatory action by ASIC may also be warranted in the circumstances. I note that while ASIC assesses all reports of misconduct we receive, we have finite resources and are not in a position to take enforcement action in relation to all potential breaches of the laws we administer.

 

ASIC considers a range of factors when deciding whether to take enforcement action, including strategic significance, benefits of pursuing misconduct and other issues specific to each case, including the time since the misconduct occurred and whether

there is available evidence that would be admissible in Court. In some cases, we decide it is more effective to deal with our concerns using other regulatory tools, such as engagement with stakeholders, surveillance, guidance and education, rather than

enforcement action. We will ordinarily only take action to recover damages or property on a person's behalf if this wouid be in the public interest, beyond the interests of the affected consumers.

 

To the extent that your concerns relate to allegations of fraud, we note that fraud offences are contained in general criminal law statutes of the states and territories.  Investigations into fraudulent conduct are generally the responsibility of the relevant 

state or territory police force. As such, you may wish to raise your allegations of fraudulent conduct with the New South Wales Police. 

 

Your private claims

 

We understand that you may wish the loans to be extinguished on the grounds of fraud, and to be reimbursed for the interest, fees and charges you have paid. As a regulator,  ASIC does not resolve disputes between parties and does not have the 

power to extinguish loan agreements or to award compensation.  

 

In the event that the protections in the UCCC and NCC apply to your loan, we provide the following general information. Under the UCCC (and now the NCC), consumers could apply to a Court to reopen a consumer credit contract on the basis it was unjust.

In determining whether a contract is unjust, Courts can consider whether at the time the contract was entered into the credit provider knew, or could have ascertained by reasonable enquiry, that the debtor could not pay in accordance with its terms or could only do so with substantial hardship. 

 

To the extent that your loan may not have been regulated by the UCCC (and now the NCC), you may nonetheless have other personal legal remedies, such as under the consumer protections in the ASIC Act or state law. 

 

ASIC is unable to give legal advice to members of the public, and ASIC generally does not intervene in disputes between a lender and a borrower. We would encourage you to obtain your own legal advice about any potential remedies available to you.

Depending on your circumstances you may be able to access the services of your local Legal Aid or consumer credit legal service.

 

If you have not already done so, you may wish to consider lodging a complaint with the lender's internal dispute resolution avenue. If the matter is not resolved, you can then write to the lenders external dispute resolution scheme.  Contact details for the relevant internal and external dispute resolution schemes are set out below.

 

Additionally, if you are encountering financial hardship you may wish to contact a financial counsellor. Contact details for local agencies are available on our Moneysmart website at  https://www.moneysmart.gov.au/managing-my-money/managing-debts/financial-counselling

ASIC's actions in relation to 'low doc' and 'no doc' loans

 

Before 1 July 2010, the States and Territories had primary responsibility for the regulation of consumer credit.  At that time, ASIC had a more limited role in relation to the regulation of credit through the prohibitions on unconscionable conduct and misleading and deceptive conduct contained in the ASIC Act. Nevertheless ASIC was active in the industry during that period.

In 2008 ASIC published Report 119 Protecting Wealth in the Family Home: An examination of refinancing in response to mortgage stress  which indentified 'low doc' loans as a possible contributory factor to the loss of equity through inappropriate refinancing and debt consolidation. This report informed the Government's development of the responsible lending requirements which were introduced in July 2010.

 

ASIC is currently reviewing how credit licensees are seeking to comply with their responsible lending obligations in the home loan sector. Our initial report from this review, Report 262 Review of credit assistance providers' responsible lending conduct, focusing on 'low doc' home loans  was published in November 2011 and can be downloaded from our website. This report, which focused on practices in the first six months from the commencement of the Credit Act, found that finance brokers were generally aware of the new responsible lending obligations, with ongoing enhancements made to their practices and procedures during this period as the industry sought to comply fully with the responsible lending obligations. The report did however identify areas for further improvement in industry practice and made a number of findings in this regard. We have raised our report findings with industry and understand this has led to a number of changes. We are currently reviewing the practices  of a number of credit providers.

 

ASIC also previously intervened in legal proceedings brought by a credit provider to repossess  the properties of a number of consumers who had obtained loans through a finance broker.  Although ASIC generally does not act on behalf of individuals with

respect to their private claims, it intervened in these proceedings to assist the Court in relation to the construction and application of the legal and regulatory framework that applies to enforcement of 'low doc' loans involving intermediaries, such as brokers, loan originators and managers, where the loans were 'rebadged' as being provided by the brokers.  Although, on appeal, the Court found that the contracts were unjust under the Contracts Review Act 1980 (NSW), the Court also found that the broker was not the agent of the lender and that the lender's conduct would therefore not be unconscionable under the ASIC Act.

We also note that concerns about 'low doc' loans have separately been raised with the Senate Standing Committee on Economics Inquiry into the Post GFC Banking Sector, which is scheduled to report in October.


Please contact Greg Hackett on 03 9280 3530 if you have any questions in relation to this letter.

 

Yours sincerely

Warren Day

Senior Executive Leader

Stakeholder Services 

 

Contact details

 

RHG - intemal dispute resolution

Lorna Fletcher, Service Delivery Manager

RHG Mortgage Corporation Ltd

Level 2, Building G, 1 Homebush Bay Drive

RHODES NSW 2138

 

RHG - extemal dispute resolution

Financial Ombudsman Service Limited

GPO Box 3

Melboume VIC 3001

 

La Trobe Financial - internal dispute resolution

Mr Brian Ford

PO Box 403

TRARALGON VIC 3844

 

Mortgage Ezy - internal dispute resolution

Mr Garry Driscoll

Locked Bag 7640

GOLD COAST MC QLD 4217

 

La Trobe Financial and MortgageBzy - extemal dispute resolution

Credit Ombudsman Service Ltd 

Case Management Team 

c/- Credit Ombudsman Service 

PO Box A252 

SYDNEY SOUTH NSW 1235.

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Comments

  • doyla66
    doyla66 Tuesday, 11 September 2012

    O.M.G. NO-ONE CAN BE TRUSTED

    How the heck are we the public who are involved in this scandle of theivery,lies,fraud and so on. This is such a scape goat inclusion into asic's policies. So really in actual fact they are and will never be of any use to any of us experiencing bank fraud and theft and some being taken to court and LOSING? WT**** where will this all end, better still where is this all headed? as far as i can see we are not getting very far and the government are more concerned about the issue of the boat people (huh they fet given a house upon refugee status,especially the asisans when they invade our country they are looked after alot better than our own people) than coming to the plate and making a stand against the banks and their outrageous,fraudulent and corrupt behaviour, that goes way beyound most peoples comprehension. How on earth can we be positive after asic have now stated the above, this is no suprise to me as i have said all along these so-called institutions are all tarred with the same brush along with the banks and all involved.

  • doyla66
    doyla66 Tuesday, 11 September 2012

    What is a Uniform Credit Code if it doesn't apply Uniformly?

    Arree, You may find it useful to contact your LMI for all your documentation as it may reveal some interesting and useful information regarding your reply from ASIC. I'll find the email address for I received for contact there. Catwoman and Blackedout helped me.

  • doyla66
    doyla66 Tuesday, 11 September 2012

    My ASIC reply was different and better, on a complaint submission. ASIC reply to letter not received yet.

  • doyla66
    doyla66 Tuesday, 11 September 2012

    O.M.G. NO-ONE CAN BE TRUSTED

    How the heck are we the public who are involved in this scandle of theivery,lies,fraud and so on suppose to find any justice when this is A PATHETIC AND WITHOUT A DOUBT sickening excuse and probable fraud documentation in legislation.Such a scape goat inclusion into asic's policies, then passing the buck as per usual to The UCCC. So in actual fact they are and will never be of any use to any of us experiencing bank fraud and theft and some being taken to court and LOSING? WT**** where will this all end, better still where is this all headed? as far as i can see we are not getting very far and the government are more concerned about the issue of the boat people (huh they fet given a house upon refugee status,especially the asisans when they invade our country they are looked after alot better than our own people) than coming to the plate and making a stand against the banks and their outrageous,fraudulent and corrupt behaviour, that goes way beyound most peoples comprehension. How on earth can we be positive after asic have now stated the above, this is no suprise to me as i have said all along these so-called institutions are all tarred with the same brush along with the banks and all involved.

  • doyla66
    doyla66 Tuesday, 11 September 2012

    Mine was identical with the exception of the lender's name etc. So too when I read mine i thought WT*.
    Where do we stand now? like playing ping pong one hit to the other.

    What is our next move does anyone know? I'm waiting on Denise to instruct us so if anyone knows otherwise could they share it.

    thanx all

  • doyla66
    doyla66 Tuesday, 11 September 2012

    Ping Pong with the end user consumer

    Your comment on this game of ping pong is exactly what I stated in my submission to the Senate Inquiry at #69. This is the exact round-and-around-and-around-and handball, buckpassing game that I got put through between late 2006 - early 2010. It is a total & complete nightmare & at the end of it all, I was the only one who ended up bankrupt for my efforts trying to obtain just some sort of justice. My dud ex-husband, his family & my own mother all blamed me for it just to cap it off! I knew I wasn't dumb or stupid but I sure as hell felt like I was going crackers. That is how they design this very un-Australian system. I was not 100% responsible (I am prepared to wear my share if I could find what it was?) but according to BankWest, Southshore Finance & the rest of the family, I was the only one who was 100% responsible! Getting a grrrrrr moment here . . better stop :p

  • doyla66
    doyla66 Tuesday, 11 September 2012

    Find this remark interesting"ASIC appreciates receiving information about credit providers and credit assistance providers from consumers as an important source of intelligence. This information helps us to identify patterns of misconduct in the credit industry, and whether any alleged misconduct may breach a law that ASIC administers and warrant a regulatory response."
    I know there was about 300 or more complaints about the specific branch and bank I am complaining about. Hence why ASIC is taking action against them. I am just not a storm financial victim - I was just another one of his clients and as I have discovered now I know am not the only one who is in this situation by far. The shady work was not exclusively done only to the storm financial victims!!

  • doyla66
    doyla66 Tuesday, 11 September 2012

    Just another BS generic letter, as mine is idenitcial with the exception of the different lenders....

    Who is actually reading & listening or even taking notice to our complaints??

  • doyla66
    doyla66 Tuesday, 11 September 2012

    Twitter works well!!

  • doyla66
    doyla66 Tuesday, 11 September 2012

    Gee I can't wait to get my letter from ASIC now,
    at least I'll know it won't be good.I did enclose some
    fraudulent LAFS and a copy of LIST OF ERRORS in the envelope
    as well ....might give them a good laugh I dare say.

  • Denise
    Denise Wednesday, 12 September 2012

    ASIC is ALLERGIC TO EVIDENCE. We know that as a fact by user experience. ASIC choke in their weeties and then immediately ring the bank to (nudge wink wink) suggest they shred the offending copies, as BFCSA Members are getting a bit peeved. Then they become secretive about their phones calls to Banker Mates. All part of a days work for our useless regulators. Most energy we see ASIC Bods use is wandering into the pay office on paydays!

    Where is our Prime Minister? You need to roll sleeves up and get down there and start teaching them how to regulate the banking industry using enforcement of law methods! They rarely use those tools so are hopelessly inexperienced. They need some Prime Ministerial lessons up there in their Ivory Towers. Macquarie Towers needs to be turned into a home fore the soon to be homeless. You need to Stop this Madness.

    [email protected]

  • doyla66
    doyla66 Tuesday, 16 October 2012

    ASIC are just as perversely CORRUPT AS THE BANKS that they are supposed to regulate. Your reply from ASIC is just another standard bullshit letter generated by ASICs lawyers specifically designed to confuse people and to try & allow ASIC to AVOID responsibility & AVOID taking any action.
    Hang the lot of them.

    Why is the Government NOT Governing? STOP THIS CORRUPTION- NOW!

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