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…

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’…