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…