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…