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…

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.

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.

 

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’…

Escalation

That first contact scenario took two months into the early part of 2014.

After a month and that branch manager still had not responded. I escalated my request for this information. I did this through the ‘contact us’ email address off ANZ’s webpage – you can’t do that directly now: you have to fill out a contact form. If you do fill out the form, you will however get a response from a monitored email address that you can then use.

In my email, I asked again for the information on the company’s lending to be disclosed to me, as required by the Consumer Credit Control and Finance Act 2003 (CCCFA). You know, the legislation that ANZ cited to me as governing this kind of disclosure.

A couple of days later, this lovely lady (she was, really, very pleasant to chat with) called me to get an initial feel for the issue. I thought that was good but also quite clever – no word by word record of a phone conversation.

Her written response to me was interesting – and arrived only a few days after we spoke: not everyone in ANZ feels they need to drag the chain.

Relevance of the CCCFA

Escalation CCCFA.png

OK, that’s fine. That’s what the Act says. But it surely begs the question: why did ANZ say this if the CCCFA does not apply?CCCFA 1.png

Access to company information

escalaltion - company info.png

Actually, no I didn’t…I stated that ANZ had been negligent in disclosing changes to the company’s lending that did, or had potential to, affect my guarantee; and I asked for ANZ to confirm what my actual liability was.

ANZ does not actually state what legislation does cover disclosure of company lending to the guarantor of that lending. He says again and again that it can’t disclose this information to a relevant interested party like a guarantor but it cannot state what the actual legal obstacle to that disclosure is.

To be continued…