Building the community

Our case is getting to the point where we are confident enough of our position to start determining how many other New Zealanders may be in this same unenviable position…where they guaranteed a company only to later find that ANZ has extended credit far beyond what was ever envisaged at the time of giving the guarantee – that’s bad – and has not fulfilled its obligations to disclose that lending to the guarantor(s) of the lending – that’s worse….

We would be interested to hear from anyone who has given a guarantee to ANZ to guarantee company loans i.e. not personal loans that are covered by the Credit Control and Consumer Finance Act 2003 (CCCFA).

We would like to hear from anyone that ANZ did not disclosure details of the amounts lent, especially if changes to that lending were of a nature that is significant and reasonably and objectively likely to affect a guarantors’ decision to give, or continue to give, the guarantee; or a significant increase or change beyond what was contemplated when the guarantee was given.

We are also interested in any circumstances where ANZ has cited the CCCFA as reason to not disclosure information on company lending to the guarantor of that lending e.g. statements that, under the Credit Contracts and Consumer Finance Act (CCCFA), ANZ is not obliged to provide disclosure to a guarantor in respect of further lending when a business is involved; or that the CCCFA controls the level of information that ANZ is allowed to provide without overstepping the privacy of the company.

Legalling up

In July things go to the point where I felt I needed more to support to see this thing through to the end. I had to lawyer up partially to validate my position as being more robust than just my opinion; and also to introduce another voice into the conversation. I think that ANZ was getting the point where it was just tuning me out regardless of what I was saying.

So, legalling up…an interesting experience…my first big lesson was choose your law firm carefully….I went with a local firm that had some some minor work for us in the past…I mean, like, all lawyers are the same…right…? Well, no…the first firm I went to was absolutely useless…provided bad advice (based on the wrong legislation), did not follow my instructions (which they are obliged to do so long as those instructions are legal and ethical) and in the end decided it was all too hard…waster three months I could not afford to lose with those losers…

The new lawyers, recommended by a personal friend with some experience in these matters, appear a lot sharper, are asking all the right questions, and hopefully will be able to help bring this to a favourable resolution…watch this space…

#anzdotherightthing

Remember Venn diagrams

Venn diagrams are the shapes we used to draw in primary school maths to show ownership or membership relationships…

Venn diagram
vɛn/
noun
 1. a diagram representing mathematical or logical sets pictorially as circles or closed curves within an enclosing rectangle (the universal set), common elements of the sets being represented by intersections of the circles.
a20subset20b1

Another sleepless night last night…in all fairness to ANZ’s cumbersome bullying, I popped a disc in my back a couple of weeks ago: while improving, it is not helping at the moment and I find that it disturbs my sleep less if I leave the ‘lectric blanket on…the flip side of that is that the extra heat keeps the rest of me awake…lots of time to think…

It occurred to me about 3AM that the definition of security in the Code of Banking Practice is consistent with the definition of security in the original guarantee. the root of my problem. That’s this definition which quite clearly includes a guarantee as a subset of security:

guarantee security

Similarly, under the Code’s definition, under the guarantee the bank still has security for the credit that it extended to my ex-partner’s company

security 3

I really don’t think that we need top split hairs over this one anymore. Even if we did, what would take precedence, noting that the Code is just that, a Code and not a law: what ANZ writes in its own documentation – we still assume that it is competent – or what is in the Code?

I would argue that ANZ’s wording indicates a higher standard than the Code requires – for which ANZ should be commended – and thus that higher standard, that it has set for itself, is the standard that we should expect ANZ to apply…would that be fair? Reasonable? Consistent?

Hmmm…those words again…

A long day…

…today, most of it on my feet and I am too knackered to do much work here tonight. Truth be known I was awake a lot of last night stressing about how all this might pan out as it wasn’t looking good…

I have these crises of confidence where I am so positive that I must be missing something, that there must be some law that bars ANZ disclosing information pertaining to company lending to the guarantor of that lending. Surely there must be..? Surely.

…and that legal obstacle is somehow consistent with the undertaking by participating banks in the Code of Banking Practice to treat customers fairly, reasonably, consistently and ethically…? Surely…

…especially when there are changes to that lending likely to affect my decision to continue to give the guarantee; or changes that are beyond what was contemplated at the time the guarantee was given…surely…

That would be the same Code under which ANZ feels it can misrepresent legislation like the Consumer Credit Control and Finance Act, or key definitions form that very Code…?

Tap dancing

For most people tap dancing may be Shirley Temple’s main claim to fame, but it also has a specific sense where someone is desperately trying to avoid being called on a subject. Having set the scene, let’s see what ANZ’s Customer Relations team had to say….

They start with two extracts from the Banking Ombudsman’s guide Guaranteeing Someone Else’s Debt:

custome rrelations 1

Nice but whatever…nothing there says that ANZ cannot disclose information on company lending to the guarantor of that lending. Remember, ANZ has already said that it has an obligation to disclose this information if it is likely to cause the guarantor to affect their decision to give or continue to give the guarantee; or if that lending is beyond what was contemplated at the time of the guarantee being given. This guide does not – not once, anywhere – say that a bank may not disclose information on a company’s lending to the guarantor of that lending. 

ANZ continues…

customer relations 2 Now, this sounds good but when you read it, it is actually only talking about disclosing if the guaranteed company has financial difficulties, and even then, it only says that the bank could be in breach if it does this. ‘Could’ not ‘would’! I’d argue that the circumstance of financial difficulty would also qualify as something likely to cause the guarantor to affect their decision to give or continue to give the guarantee. This does not say that a bank may not disclose information on a company’s lending to the guarantor of that lending.

Would you not think that if there was a clear legal obstacle to disclosure ANZ would have cited it by now?: Wouldn’t you…if such an obstacle existed..?

security 1

Now we’re starting to get into some nitty-gritty…ANZ may choose to believe that the separation of security and guarantees is intentional. It is certainly convenient for it to believe so however its guarantee defines security:

guarantee security

In other words, the guarantee, the root of this whole problem defines a guarantee as a subset of security. It is reasonable then to expect that anything that applies to security then, unless stated otherwise, to guarantees.

The Customer Relations team continues…

security 2

No, the Code’s glossary does’t say that. It doesn’t say that at all. It doesn’t even list ‘security providers‘ let alone offer a definition for that phrase. The 2012 Code of Banking Practice defines ‘security‘ as:

security 3

I have included the items above and below ‘security’ to show that there is no other listing for ‘security provider’ in the Code’s glossary. The glossaries for 2007 and 2002 versions of the Code have the same definition of ‘security’and no definition for ‘security providers’.

Just for the record, here is the Code’s definition of a guarantee:

security 4

This is also the same in the 2007 and 2002 versions.

I think it’s reasonable to assume that ANZ employs competent staff. If not, it’s up to ANZ to prove that its staff are not competent. What does it say to you when a staff member from a major banking institution like ANZ makes a statement that is so patently untrue..?

What didn’t they say?

Not one thing about their obligation to disclose material change in the lending to a guarantor. Not one word. Just tap danced right around that one…

Back to ANZ…”Customer Relations”

The response from ANZ’s regional manager said that there are circumstances when ANZ has an obligation to tell a guarantor about changes to the lending that they are guaranteeing. These include when:

there are changes change that are likely to affect the guarantor’s decision to give, or continue to give, the guarantee; or

there is a  significant increase or change in lending beyond what would be contemplated by the parties when the guarantee was given.

This is what ANZ described as a ‘material change’. I don’t think that I am being silly if I consider the advance of hundreds of thousands of dollars of credit as a change likely to affect my decision to give or continue to give the guarantee. In the same vein, advancing that level of credit is certainly well beyond what was contemplated at the time that I gave the guarantee. Things like:

the purchase and/or sale of property; the approval of significant new loans;

the point when the company’s debt exceeded the value of its assets and thus directly impinged upon the guarantor;

applications, approved or otherwise, for mortgage holidays as these are generally indicative of cash flow issues within a company and which may thus directly affect the guarantee; and

instances where the company has defaulted in loan payments.

I wrote back stating that I believed that these circumstances existed in this case and asking ANZ to uphold its obligation. This is a major bank that undertakes in the Code of Banking Practice to treat its customers fairly, reasonably and ethically.

She didn’t answer respond and passed me to ANZ’s Customer Relations team…

In The Dukes of Hazzard, this is about where Waylon Jennings would drawl “Now, folks, this is what you call getting the good ol’ Hazzard run round…”

Seriously, had ANZ responded and cited the actual legislation that prevented it disclosing this information to me, I would not have been happy but que sera sera and I would have started packing…

…but…

…get this…

ANZ

…has not…

…once…

…stated, cited or otherwise referred to any law that prevents it disclosure information on company lending to the guarantor of that lending…

Legal advice

In her response to me, the ANZ regional manager told me that I should have obtained legal advice before giving my original guarantee.

I did. In fact, I had to as that was a legal requirement then (it possibly still is). That consultation was for me a bit of a non-event: I made an appointment with a solicitor – I didn’t have one of my own – and met with him for all of about twenty minutes.

He was quite dismissive of the whole thing “Nothing really to worry about” “I don’t know why there’s still a requirement for legal advice for one of these” referring to the draft guarantee. On the basis of that reassurance, I signed the guarantee and he witnessed it.

I approached him, describing my current situation, recounting my recollection of our meeting, and requesting his thoughts.

His response was that such a guarantee is nothing to take lightly and that he would have given me all the appropriate advice and warnings.legal 1.png

As all his advice was verbal and I received nothing in writing, I expected that this would be a he said/she said stand-off. What he proceeded to say was a lot more interesting:legal 2

legal 3.png
Highlighting is mine

Like a bank manager, one would reasonably expect a lawyer, having been read into the situation, would give credible advice. I mentioned several times in my initial email that this matter related to a company account and  also attached a copy of the original guarantee that he had witnessed for me in which this is clear.

At time, in the face of everything else going on, I simply thought he had gotten this wrong, although he had been confident enough to put this opinion in writing. More recently, having trawled through every relevant piece of documentation and correspondence that I have, I could not find a single thing, rule, law that obstructed the disclosure to a guarantor by ANZ of changes to lending that he had guaranteed.

He may have been right, after all.