Three loans, no redundancy cover

Under the CCCFA, lenders must ask for up-to-date evidence about a borrower’s ability to repay a

Three loans, no redundancy cover

When Bev* took out a $17,000 loan to buy a car, she also purchased payment waiver for $1,700, explaining it was possible she would be made redundant. Bev’s partner also arranged a consolidation loan with the same lender, with Bev making all the payments. After Bev was told she was going to be made redundant, she arranged a $4,700 loan for her son to buy a car; Bev was guarantor for the loan. Bev was told the payment waiver for her car loan did not include redundancy. Bev complained.

The IFSO Scheme found the lender had not met its obligations under the CCCFA and the Responsible Lending Code i.e. to make reasonable enquiries that Bev could repay the loan, or act as guarantor, without suffering substantial hardship. The lender didn’t get up-to-date financial information. It relied on previous information, and only checked Bev’s employer’s contact details. The lender also knew it was likely Bev would be made redundant.

During the complaint investigation, Bev was diagnosed with a chronic illness and couldn’t work. The premium waiver applied and covered the instalments for her car loan. However, Bev was struggling to meet the consolidation loan payments, so the lender agreed to restructure the loan by extending the period, reducing the interest rate, and waiving the set-up fees. It also agreed to remove Bev as a guarantor for her son’s loan.

Complaint settled.

* Names have been changed.

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