COSL denies consumers 'buying time' with disputes
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28/10/2011 6:00:00 AM
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COSL has denied claims by the MFAA of a growing trend of borrowers filing financial hardship claims to "buy time".
The comments come following Credit Ombudsman Raj Venga's testimony to the Parliamentary Joint Committee inquiry into the proposed NCCP amendments. Venga spoke in support of amendments to the NCCP requiring lenders to respond to hardship applications within 21 days, and to suspend enforcement action until they had informed delinquent borrowers whether or not they would vary payment terms. While the MFAA also expressed support for provisions delaying enforcement proceedings, saying these were already part of its Code of Practice, CEO Phil Naylor claimed in a submission to the inquiry there was a growing trend of borrowers lodging applications to "buy time, rather than because of a bona fide dispute".
Venga denied this, telling Australian BrokerNews that, while there was evidence of some borrowers taking these actions, it was not prevalent.
The MFAA argued that lenders be allowed to resume enforcement action against borrowers who had filed financial hardship claims if EDRs had not finalised the applications within 60 days. The association claimed borrowers seeking to "buy time" through claims of financial hardship could delay enforcement by months by applying to an EDR. However, Venga stated that COSL processed FH claims quickly.
"COSL is compelled by ASIC’s Regulatory Guide 139 to require lenders to suspend enforcement action when it receives a complaint from a consumer. Given this requirement, we accord FH complaints first priority in our complaint handling process. Consequently, the median number of days it took us to close a FH complaint is 45 days. Thirty-five per cent of the FH complaints were closed in less than 30 days. Those are excellent timelines given our increased case load," he said.
This increased case load, Venga said, was due to NCCP regulations requiring credit providers, intermediaries and others engaged in credit activity to join an ASIC-approved EDR. He said the regulations have led to a 22% rise in COSL membership in the last financial year, on top of a 46% increase the year before. With this membership spike has come an influx of consumer complaints, Venga said.
"Predictably, the increase in membership numbers has seen a marked increase in the number of complaints we receive. In fact, there was a 72% increase in the number of complaints we received last financial year compared to the previous one. The number of FH complaints increased proportionally," Venga said.
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Latest Comments
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Mark on
28 Oct 2011 12:06 PM
A distinction needs to be drawn between a borrower applying for financial hardship from a lender, and a borrower complaining to an EDR about the lender's decision on a financial hardship application. My experience is that most borrowers who ask for financial hardship consideration fail to provide the information necessary for the lender to assess whether the accommodation sought will assist the borrower (as the lender is required to do under NCCP). Even when the information is provided, it is often after many days or weeks delay. If the lender is required to cease all action as soon as the borrower says "I am in hardship" then that would be an open ticket for borrowers to delay legal acton indefinitely. I have no problem however with the lender being required to cease legal action where the borrower has been denied financial hardship assistance from by the lender and makes a formal complaint to the ombudsman.
This of course assumes that the ombudsman acts promptly. In my experience COSL do a very good job at considering complaints about financial hardship. However, those who have the misfortune of being a member of FOS will agree that they are woeful. Delays of months or even years are the norm
Finally, Raj is wrong when he says that the incidence of borrowers lodging a complaint to delay proceedings is not pervalent. I estimate a significant proportion of complaints are for this purpose alons - and borrowers are increasingly being advised by financial counsellors, TV programs, newspaper articles and consumer credit legal centres to do just this.
Robert Baumber on
28 Oct 2011 01:52 PM
With 72% increase in complaints due to NCCP, does this mean customers are in fact getting worse service now, than bebore regulation? The idea of regulation was to improve outcomes form borrowers, not make them worse.
WhistleBlower on
28 Oct 2011 03:22 PM
COSL knows full well that people are constructing complaints as part of a strategy to delay proceedings against them... and I have seen two cases whereby I have argued, and presented the evidence of this to COSL.
I have even assisted COSL by giving them advice as to 'how' to assist a complainant in a matter against me.
It was so obvious that the customer was making a complaint to delay lender actions against him, that he essentially took a shot gun approach to anyone he had ever had any dealings with and accused them of dozens of things that he copied straight out of the relevant Acts.... it was so broad that I rang COSL and coached them into providing the complainant at least some guidance, and support him in crafting and narrowing his complaint... it was so obvious that it was a construction-of-complaints and included quite surreal sections of 'The Acts' that had nothing to do with his mortgage history, and I dare say anyone else's.
.. I actually felt for the complainant and was shocked at the poor service and advice provided to him by COSL.