It comes to this…

 

A little over two years down the track from the surge of activity in the initial stages of this blog…the final stage, I guess…

In those two years, I ditched the lawyers who could not follow instructions and got recommended to one who wanted to get into the fight. In November 2016, we submitted a detailed complaint to the Banking Ombudsman. It was about 20 pages, cross-referenced to all the supporting documents.

The response from the Banking Ombudsman was that it was the same as the original complaint from 2014. ???? How can that be when the new complaint refers to information, including the loan documents that we didn’t have in 2014? Howq can that be when the 2014 complaint only referred to ANZ’s statements that it did have an obligation to disclose information to guarantors under certain criteria (which we said existed)

Draw your own conclusions if you like. 2014 complaint. 2016 complaint

After three months of pushing the Banking Ombudsman finally deigned to consider the issues raised…kind of…she managed to squeeze a response to the dozen or so questions raised into a single page.

Well, actually, she didn’t…she only considered one small part of the problem and probably hoped that the rest would just somehow go away…feb 17 other.JPG

The use of the ‘ and/other’ construction is not confusing – except possibly for someone trying to weasel out from its common meaning. If we say “apples and other forms of fruit” are we including apples as forms of fruit? Yes, we are. Unsure about this? How about if we spin it around and say “apples and other forms of vegetable”. No? Doesn’t work for you either…?

The Code of Banking Practice is what it is and says what it says not what the ANZ would like it to say or what it might say to make life less challenging for the Banking Ombudsman. It’s in black and white.

What is interesting and totally overlooked by the Banking Ombudsman is that ANZ’s own documents list guarantees as forms of security:

guarantee security
from the guarantee
loan doc security
from one of the loan documents

As Al Gore might say, an inconvenient truth….

And this is the crux of it…by failing to disclose this information to me – as it was required to – ANZ denied me any opportunity to prevent further lending, and mitigate or repay existing debt…

Even after I raised my concerns with ANZ – after learning almost by accident of the debt in 2013 – it still refused to disclose this information…but that’s our next story…

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…

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…

Escalation – Material Change

Continued…

Now we get to the good stuff…material change 1.png

…and just in case I missed it the first time…material change 2.png

Material change is a concept that has been introduced by  ANZ into the conversation (that’s important). It is not something that I developed from my own research or sources.

That sounded promising but  a little vague. I asked ANZ for its definition of ‘material change‘.material change query.png

This was the first part of the response:material legal.png

I hadn’t actually asked for any legal advice but took that point aboard and we’ll come back to it in the next post. This is the ANZ’s definition of ‘material change‘:

material change 3.png
Highlighting is mine

Just to labour the point. Material change in relation to the disclosure to a guarantor of changes to a company’s lending is a topic introduced by ANZ, not by me. The two examples above have been provided by ANZ, not by me. ANZ continues its explanation in the same vein:

material change 4.png
Highlighting and redaction is mine.

What I am saying, in response to these conditions and criteria offered by ANZ, is that the undisclosed lending to my partner’s company that was not disclosed to me by ANZ:

Are changes that are significant. I don’t know about anyone else, but increases in the guaranteed debt of five and six figures are what I would call significant.

Are changes that are reasonably (remember that undertaking from the Code of Banking Practice …to treat customers fairly and reasonably…”?) and objectively likely to affect the guarantor’s decision to give, or to continue to give, the guarantee. Absolutely changes of that “significance’ would have affected my decision to continue to give the guarantee. Hang on to the phrase ‘continue to give’..it’s important in the next round…

Remember my original guarantee was given to enable my partner to buy a home for a family member under her company, in fact, that was the whole raison d’etre for the company. The property was sold at a break even price at the end of the following year. I did not contemplate any other lending against that guarantee and would have expressed this – had ANZ disclosed the subsequent lending to me and, as it did for one loan later, sought my approval prior to proceeding.

material change 4.png
Highlighting and redaction is mine

With the exception of the one loan that I approved in 2009 for around $90k, none of ANZ’s subsequent lending to my partner’s company was what I contemplated at the time of the original guarantee.

I responded thus and this has been the foundation of my position the last two years (might pay to remember that phrase ‘my position’ too as ANZ refers back to that importantly later on):material change response 1

material change response 2
Redacting is mine

This brought our escalation phase to end and led us into Round 3: ‘Customer Services’…