On the 29th May 2018 a news story broke in one of the ‘Mortgage Industry Publications’ (reference: www.mortgagebusiness.com.au) . It discussed the appointment of a Canberra law firm ‘Chamberlains’ to act in a planned class action law suit representing various customers of Australian banks that are "incurring financial losses as a result of entering into loan contracts with banks since 2012". Those losses being due to ‘irresponsible lending practices’.
There are heavy monetary penalties & criminal charges that can be applied to lenders & their employees where ‘irresponsible lending practices’ can be proven.
There is no doubt, as seen through the current ongoing ‘Royal Commission’ in to banking practices that customers would from time to time have been placed in vulnerable positions due to ‘irresponsible lending practices’. Notwithstanding the above, there are some important points for the law firm representing these clients & for the clients to take note of when considering such action :-
Application forms that are completed with customers through the loan process are executed by the clients under various ‘declaration’ sections.
When executing loan application forms, customers are signing to state that the financial position , assets , liabilities, income & commitments, are true & correct to the best of their knowledge, at that time.
Omission of information on a loan application which is important in the decision making outcome of a credit assessor , would be considered a false declaration.
Loan application files are regularly audited by lenders & the relevant Government body (ASIC).
The clear message to take from the above points is that customers could possibly find themselves unwittingly or otherwise, at fault through the loan application process, & thereby open themselves to a law suit or claim against them.
It’s a good reminder that transparency from all parties in the loan application process is critical in obtaining the correct outcome. Sometimes a borrower can simply not be able to satisfactorily prove to a lender at the time of application that they can borrow, or increase borrowings as the case may be. While frustrating, that should be seen as an acceptable outcome.
Please contact Michael on 02 6583 2211 if you have any questions.