Here’s how this works. If you guarantee or otherwise secure a loan for a person, you are protected under the CCCFA and, since 2015, the Responsible Lending Code. If you guarantee a thing, like a company, then you have no such protection. The guarantee is what they call ‘all obligations’ and ‘unlimited’: the gift that keeps on giving taking.
What that means is that ANZ can keep on lending against that guarantee. The really good bit is that ANZ feels that it doesn’t have to tell the guarantor about any of this until such time as it wants its money back and it hits him with a demand for the full amount of the outstanding debt. Yes, really.
Many years ago, I signed a guarantee with ANZ for my partner’s company (not a business – just a LQC) to buy a house. When that house was sold, breaking even i.e. no loss, I thought that was the end of it. Little did I know.
When we separated many years later, I found that ANZ had extended credit to the company without my knowledge. Not here a hundy, there a hundy but hundreds of thousand of dollars.
Now let’s be clear about one thing. My ex-partner is as much a victim in this as I am – I don’t think that she’s stashed the money in some offshore account or buried it under the rhubarb. As I weaned us off our collection of finance cards so we could live within our means, I think that ANZ dangled the carrot of (apparently) unlimited credit against our home, credit that it didn’t need to tell me about, let alone seek my approval – even though I the guarantor.
Not surprisingly, I had ANZ on about this. After almost three years of being led round the garden path by ANZ, we’re at the end of the road.But:
ANZ has never been able to tell me what law prevents it telling me about all that lending.
Neither can the Banking Ombudsman.
In April 2016, ANZ accepted my position and offered to reduce my liability. That sounds good but means nothing unless it extends that reduction across the entire company debt.
That concession by ANZ sets a massive precedent for any guarantor for a company who:
is not otherwise connected with the company e.g. by virtue of matrimonial property.
was not informed by ANZ of lending by the company as it occurred.
As you read through, remember that ANZ has signed up to the New Zealand Code of Banking Practice. Participants in the Code undertake to “…act fairly and reasonably towards you, in a consistent and ethical way...”
ANZ’s conduct may cause you to revise your definitions of fair, reasonable and ethical.