Eliminate bad banking practice in New Zealand
Eliminate bad banking practice in New Zealand
I'm probably pretty screwed and about to lose my hone thanks to ANZ's predatory practices...it's been a five year journey to this point but hopefully it's one that others can learn from.
In November 2018, the Financial Markets Authority and the Reserve Bank released two joint reports that were highly critical of the culture and conduct of banks in New Zealand. You can read them here:
Key issues identified included the lack of ownership and accountability for senior bank staff and the banks' boards; and the weakness of the banking regulatory systems in New Zealand.
What needs to be done?
1. Establish a Royal Commission into Banking Practice in New Zealand. The one is Australia is uncovering the worst sort of exploitative practices.
2. Establish the Banking Ombudsman under the Minister for Commerce and Consumer Affairs. The current banking ombudsman scheme has no system for review of appeal and is not subject to any best practice review or accountability.
3. Enact legislation to ensure that all lending, personal or commercial, is disclosed to people or agencies providing guarantees or other forms of security for that lending.
4. Ensure that, where there is a legislative requirement for legal or other professional advice, this advice is provided in writing.
My Story
This is very much the Reader's Digest version of a complex issue.
In 2004 I gave a guarantee for my then-partners company, which owned a property that our daughter lived in when we moved away. When that property was sold in 2005, I thought that was the end of it. Soon after we split up in 2013, I found that the bank, ANZ New Zealand Ltd, had continued to loan the company money, lots of it, without my knowledge.
Two things I need to make clear here. the first is that I don't hold my ex responsible for this. At the time she was recovering from a head injury - and we know way more about those and how they affect people than we did back in the 2000s - and this affected her in many ways. Secondly, yes, I know that some guarantees are open-ended and that some banks don't have to advise guarantors of further lending.
But this isn't the case with ANZ. The Code of Banking Practice that covers this period (Code versions 2002, 2007 and 2012) places clear obligations on banks to disclose lending to guarantors and other providers of security. ANZ's guarantee and its loan documents quite clearly define guarantees as forms of security so the obligations in the Code apply.
I didn't know this at first - I didn't get copies of the loan documents until mid-2016 - and so had to take ANZ at its word when it said that such obligations did not apply to guarantees. ANZ must have lacked confidence in this as one of its senior managers went so far as to make up a definition of security provider, that he attributed to the Code's glossary, to support ANZ's position. Actually, the term security provider' does not appear in the glossary of any version of the Code back to 2002, nor anywhere else in the Code.
ANZ also likes to say that the Consumer Credit Control and Finance Act 2003 prevents it disclosing information to guarantors of company lending. Totally untrue. By definition, this Act only applies to personal lending, not company lending and you'd expect a large bank like ANZ to know this.
When I finally got copies of the loan documents, there were clauses that authorised ANZ to disclose information on the company's financial position to guarantors. ANZ must have known this for the two and half years it said it did not have authority to disclose information to me. This year, I learned that the Privacy Commissioner had determined in 2012 that this sort of information was also releasable to guarantors as 'personal information' when it involved jointly-owned property used as security - as in this case. Does anyone really believe that ANZ didn't know that?
In April 2016, ANZ accepted my position and reduced my liability under the guarantee to only the $91k of the only loan that it did disclose to me. In fact, not only did it disclose this loan to me, it required me to approve it. You might think this is a big win - certainly it sets a great precedent for anyone else in this position - as this is my ex-wife's company I'm still liable for half the rest (still well over $200k) as its matrimonial property. It is certainly not the action, though, of a bank that thinks it is in the right.
When ANZ didn't telling me of this additional lending, some fifteen loans as best I can figure, it denied me any opportunity to do anything about it. Who would have known that such a thing was even possible, especially with the bank that would approve a temporary overdraft for $200 without getting a written OK from both joint account holders.
The Code also requires ANZ to check that the lender is able to meet the terms of the lending i.e. repayments etc. ANZ did not do this either.
The Banking Ombudsman
Yes, I have been to the Banking Ombudsman...three times: in 2014, 2016 and 2018...and each time been totally underwhelmed:
Where we provided a legal opinion that ANZ erred in not informed me of the additional lending, the Banking Ombudsman did not explore this further because ANZ disagreed with that advice.
Where we requested a review of my case through the chair of the board of the Banking Ombudsman, the QC appointed to that review was specifically constrained to only consider the process followed and NOT the issues raised.
Where we provided evidence of quite blatant obstruction and deception on the part of ANZ New Zealand, the Banking Ombudsman was silent.
The Banking Ombudsman attempted to deflect complaints to government agencies like the FMA, Privacy Commission, Commerce Commission etc. Each agamcy has responded that it considers the Office of the Banking Ombudsman to be the most appropriate agency for investigation and resolution of these and similar issues. While I tend to agree with the Banking Ombudsman's logic on this, the Government, at this time, does not.
The way ahead
One lesson learned - among many - is that ANZ's tactic is to delay and obstruct in the hope that people will give up and go away and many probably. Be persistent and firm but not abusive; keep repeating the facts until they listen. In my case, they are down listening, know that they have a weak as case and are trying to bulldoze through a solution. Once I lose the house, I have nothing more to bargain with.
So like I said, I'm probably pretty screwed as the auction is on 8 November. But there are some things that can be done:
1. Establish a Royal Commission into Banking Practice in New Zealand. The one is Australia is uncovering the worst sort of exploitative practices.
2. Establish the Banking Ombudsman under the Minister for Commerce and Consumer Affairs. The current banking ombudsman scheme has no system for review of appeal and is not subject to any best practice review or accountability.
3. Enact legislation to ensure that all lending, personal or commercial, is disclosed to people or agencies providing guarantees or other forms of security for that lending.
4. Ensure that, where there is a legislative requirement for legal or other professional advice, this advice is provided in writing.
Thank you...