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Banks are not evil, say lawyers

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Australian Broker | 18 Oct 2012, 08:00 AM Agree 0
A leading law firm has come out in defence of banks, claiming borrowers ‘get what they want’ and are not victims of any wrongdoing
  • JohnW | 18 Oct 2012, 10:14 AM Agree 0
    Standing ovation from me. It's certainly popular for people to point blame at others and avoid responsibility in these here topsy-turvy-nanny-state times.
  • Broker Tony | 18 Oct 2012, 10:23 AM Agree 0
    Harsh assessment but true. Banks and brokers do not drag people off the street and coerce them into borrowing more money than they can afford. Borrowers have to accept responsibility for their own actions. Financial problems usually ocur following a change of circumstances that could not have been forseen by the lender. The main legitimate complaints would be around the way the lenders work through the difficulties with the client and plenty of improvement is needed in this respect.
  • MeganM | 18 Oct 2012, 10:29 AM Agree 0
    Borrowers need to take more responsibility for their actions and take steps to understand the contracts and risks they are entering into. Too many people are driven by greed and look to blame someone else when things go wrong.
  • Qld Broker | 18 Oct 2012, 10:32 AM Agree 0
    Here, here. Well said. It seems in this day and age it is easier to blame someone else rather than take responsibility for themselves. It's a shame, but also now a fact of life. Cover your backside.
  • Power Grab | 18 Oct 2012, 10:32 AM Agree 0
    Based on the above article I would agree with gadens, but the headline says Banks are not evil. Seems to me that the whole GFC and what has come after it around the world, particularly Europe and US, IS DEFINITELY the work of the banking system and not one of those evil crooks went to jail for their fraud and theft of billions. Evil is not strong enough. Would like to know Gadens assessment of the banks and thier banksters on that score......
  • the Banks are your client | 18 Oct 2012, 10:33 AM Agree 0
    Of course Jon would defend the Banks. His law firm represents them!
    A snake-oil salesman also is "not a branch of a social service agency" but would be howled down if it sold a dodgy product and then when the product failed, instead of paying damages to the unsuspecting customer, it tried to reclaim damages from the consumer or the investor (or both)
  • Rach | 18 Oct 2012, 10:37 AM Agree 0
    Well said Jon.
  • ozboy | 18 Oct 2012, 10:39 AM Agree 0
    Where does Mr Denovan work? Isn't he also council for the MFAA? While not disagreeing with what he says it is very hard to take this seriously when your income is derived from the banks.
  • Moonae | 18 Oct 2012, 10:44 AM Agree 0
    Neither are Brokers but seemingly the Banks are keen to deflect blame to Brokers where clients litigate. Could John Denovan maybe have extended that comment to Brokers too ? I see a big front coming where banks are going to deflect litigant claims to Brokers fault. They are already reducing their support doc requirements so as to have a basis for a see/hear no evil approach. Gives them a basis for absolution. Just watch
  • Nicklas | 18 Oct 2012, 10:46 AM Agree 0
    There are a number of cases where lenders have been very unfairly treated by the courts. There is a shift by the courts towards borrowers not having to accept any commercial responsibility for their actions, as long as they claim they did not understand there could be consequences to spending other people's money.
  • Bill Walsh | 18 Oct 2012, 11:17 AM Agree 0
    The courts have always come down on the side of the "little" person, against the big banks. The big banks then need to find an outlet to shift the blame - "Hello Mr. Broker!" The "little" person then thinks, "who have I got a better chance of whacking - the big corporate bank with armies of lawyers, or that one-man band trying to eek out a living?" The bank then steps back into the shadows and let's everyone else sort it out. Evil? Maybe not. Devious, disloyal, unscrupulous - probably all of those!
    I do agree that the borrower also needs to stick the hand up and take some responsability in these matters. In 30 years in the industry, I've have never come across a client who doesn't have a fair idea of what they can look after, financially. If they're making an application, the broker should act mostly as a "introdcuer" of business and the bank has the responsability to assess and lend prudently. If they fail in their duty, they should cop it on te chin. If the borrower bit of more than they can chew, then they need to admit fault as well.
  • Warning | 18 Oct 2012, 11:36 AM Agree 0
    If the banks start losing in court like other judgements, poor Jon Denovan's pay packet is going to shrink incredibly. Lord forbid that from happening. He better start yelling out now while he can. Especially since he was the one who designed the plan to make sure that brokers were the escape goat for the banks - (arm's length theory). You must be kidding yourself if you think this lawyer would not sell you out to the banks in a heart beat. Brokers beware of wolf in sheep's clothing.
  • Rosie Cornell | 18 Oct 2012, 11:53 AM Agree 0
    I'm sorry but in our case it was the bank manager who a) failed to tell me the bank had rejected our loan application b) reapplied for the loan with dodgy figures and c) the banks own internal documents state that we cannot afford to meet repayments but we have property to sell so the bank won't lose money.
    How does this make me greedy, stupid or wrong? We accepted this loan because we believed that we could afford it based on our figures - the bank knew we couldn't afford it. How did this loan get approved? What about duty of care? Banks push the Code of Banking Practice - they refer to it in contracts - and we, the hapless customers who don't know how banking works, get caught out believing that our banks would never do anything to harm our financial stability. Little did we know that bankers are just criminals in expensive suits.
    I'm afraid this story is flawed and biased - banks are filled with selfish individuals who are only too keen to burn customers for their own financial gain. For banks to continue to take customers to court when they know the customers documents were altered by the bank employees is simply evil. Although it doesn't surprise me that a lawyer who depends on his income by representing banks in these cases would come out and claim that banks are the victim in this - anything to avoid responsibility for the harm caused to real victims of bank fraud - the customers who trusted a corrupt system.
  • Rosie Cornell | 18 Oct 2012, 12:01 PM Agree 0
    I forgot to add that we lost everything at Summary Judgment - so much for courts backing the little guy.
    When did our bank know our loan was 'problematic' - I'm assuming that was during the audit in the following year when the bank manager suddenly and unexpectedly left the bank - to start working on the family farm again.
    There are so many aspects to our case that lead to only one conclusion ... banks are evil and aided and abetted by lawyers who manage to delude themselves that they are on the side of right.
  • Rosey in Victoria | 18 Oct 2012, 12:18 PM Agree 0
    Well said Jon. @thebanksareyourclients
    I dont know what business your in, but lets imagine you are a wholesaler of electronics. You've provided stock to ABCDigital. Because you've had many dealings with ABC you've agreed to give them a 90 day payment term. They've come back to you after 90 days and said we are not going to pay you because you gave us a dodgy product, we cant return the product because we've sold it and have already used the proceeds to our financial benefit, but we are protected under the dodgy product law, so even though your terms were clear and we could have returned, exchanged, or cancelled the order once we realized we received something different than we expected, we chose to benefit from the transaction first, and now you'll have to accept payment on our terms. What a "snakeoil wholesaler you are...
  • Duped | 18 Oct 2012, 12:24 PM Agree 0
    What!! It's not the banks fault borrowerers are loosing their homes and are declared bankrupt! Of course you will defend the banks after all you make money defending them.What about the people who have had their loan application forms added to after signatures are obtained and crazy earnings that only a bankster or lawyer would earn added to the same forms just to justify a loan approval.I'm sure that if any of these fraudulant acts didn't occur most of these people wouldn't be in the position they find themselves in. It would be far better for the banks to just say "no" we can't give you a loan. Money Hungry Banks and lawyers
  • Brisbane broker | 18 Oct 2012, 01:47 PM Agree 0
    There's a big difference between a normal application and a fraudulent one. If your broker or banker has fraudulently altered your application without your knowledge, then that's bad and the individual needs to be accountable - and they are, as this is fraud. However you as the borrower don't have to sign the mortgage docs when they're sent out. You, more than anyone else including the banks assessment team, should know how much you can afford to repay. Too often I see people borrowing above their means, because they WANT the nicer house or to expand their business. You people don't have to borrow the money. Should I blame Sizzler because my belly is sore because I chose to eat too much at their buffet? I mean surely they had a duty of care to assess my capacity and regulate my serving size rather than just let me loose on the buffet?
  • Marko | 18 Oct 2012, 01:58 PM Agree 0

    You accuse Mr Denovan of bias but you are even more so - pot and kettle!

    So by your reckoning everyone - including the court system - is to blame but you?

    Any reasonable person of average intelligence knows what they can afford and what they can't. So reagardless of what the bank manager did or did not do (and from the sounds of it the courts did not find any wrongdoing on behalf of the bank)you shoudl have been able to exercise your own discretion.

    You had your day in court and lost.

  • LynNZ | 18 Oct 2012, 02:33 PM Agree 0
    The banks are as guilty as sin. There is proof of it! Mountains of it! Why are some banks and non banks alike paying out/settling out of court eh? Those same Aussie banks have spread their venim and dealt the same blow in New Zealand - all is being revealed by lawyers. If they - the banks are not guilty, how come they are paying out and gaging people who have been paid out/or made special agreements with.
    Driven by greed you say Megan - yes the banks are the ones with the greed, not the public. Whose been making millions of profit - ask yourself? The banks are the only ones making profit. This whole Banking fraud and corruption requires to be fully investigated by a Royal Commission into Banking.
  • ChrisM | 19 Oct 2012, 10:56 AM Agree 0
    I enjoy reading the polarising commentary of such topics.

    In my experience there are rogues on both sides. Banks and brokers have been known to disregard what is best for the customer in seeking profits for themselves and Customer have been silly in thinking that omitting relevant financial information would have no consequence to their long term financial stability.
    That said, it is not in any banks or lenders official policy to go about defrauding customers for the sake of a dollar, and it is not most individuals intention t o live above their means.

    Unfortunately In organisations such as banks or other lenders, where there exist activities that aren’t inline with the overall policy or intention of the financial product being applied for, people have been known to bend rules because no one is looking or the bank/lender doesn’t believe in their own documented policies. That doesn’t make the bank bad. Banks have thousands of employees and banks mostly want to play by the books. After all they don’t want to pay fines to regulators who find intentional wrong doing.

    On the other hand, individual people of “average intelligence” getting their figures wrong aren’t the majority of the pool either. They are outliers. While unfortunate, its not something that couldn’t be avoided by spending some time and money seeking professional advice prior jumping into a commitment that could ruin you financially. Consumers more often than not don’t consider if they can affor a product for the long term. Do your figures support you being able to afford the product repayments if one of you lose your job, or both of you? How long can you afford payments if you lose your job or have a major expense pop up? Have you thought about these scenarios occurring in the event of a 5% interest rate rise 10 years from now? No? Then you haven’t done your figures.

    Theres a difference between what you WANT and what you can afford. And in most cases banks want to give you what you want, but its up to you to know whether you can afford it. There is some changes that now put some responsibility on a bank, but ultimately you should still know whether you can afford it over the life of the product.

    I genuinely feel for those that have horror stories, but there are ALWAYS risks involved in the money game. Its about how you manage those risks as a consumer or as a lender.
  • Dave | 19 Oct 2012, 11:01 AM Agree 0
    What he should have said was, "Banks aren't mean....they pay us lots of money!"

    Ha Ha Ha

    But I agree totally!
  • sidbroker | 19 Oct 2012, 11:10 AM Agree 0
  • Brisbane broker | 19 Oct 2012, 12:08 PM Agree 0
    Btw, as the borrower, didn't you ask the bank if you could borrow the money?
  • Local Broker | 24 Oct 2012, 10:54 AM Agree 0
    Rosie - from your Blog "The tort of Negligence means a failure to take reasonable care to prevent loss or damage to others that was foreseeable and should have been prevented. Hang on a minute, foreseeable? Blind Freddy could see what the likely outcome would be if the bank gave us money that they knew we couldn’t pay back"
    If it was so easy to see that you had no way of ever paying it back, why did you a) ask to borrow it initially, and b) accept the offer of finance from the bank?
    Just asking as it seems even "blind Freddy" would have know that was never going to end well? Did you think it was a gift?
  • Gary Perth | 24 Oct 2012, 11:53 AM Agree 0
    There is no clear right or wrong, but there seems to be an attitude, promoted by lenders that credit is a given right and now the public, especially the more youthful in society expect credit, they almost live on it.
    The monster has been created over the last three decades. Until Government apply restictions to borrowings,IE: Min 10% deposit, no retail sales with 48 months interest free credit and restictions on credit card debt, the monster will grow. The level of personal debt in Australia is massive and not good for long term stability. When the next major hiccup in the world financial markets happens, and that could happen sooner than later, the truth of the evil banks trying to increase massive profits at any cost, with little regard for responsible lending will be seen.
    How many brokers have tales of clients that they couldn't set with a particular lender only to have the client go direct to a branch and have the loan approved by the same lender? Evil, maybe not, greedy, yes.
  • Peter Simmons | 25 Oct 2012, 03:23 PM Agree 0
    My experience has shown that financial commitments the borrower makes after loan drawdown, are often likely to be the problem cause for many borrowers getting into financial difficulty.
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