FSCL urges lenders to take note

Lending company faulted in CCCFA related case.

Monday, September 19th 2022, 8:35AM

by Eric Frykberg

A lending company has been ticked off and ordered to pay $500 in a case that asked whether a woman had been sufficiently helped to fully understand the contract she was signing.

Financial Services Complaints (FSCL), found the case came under a section of the Credit Contracts and Consumer Finance Act (CCCFA).

The dispute concerned motor vehicle finance. But FSCL urged all lenders to note its findings.

At issue was whether a $20,000 loan should be paid off at $155 each week or each fortnight.

The woman said she was told the payments would be made fortnightly. The lending company and the car dealer said she signed a contract to make the payments weekly. The woman agreed she signed the agreement but did not have time to read it, and was rushed out of the office by the car dealer who had other clients waiting.

In subsequent dealings, notes made by the lending company clearly showed the woman believed her payments would be made fortnightly. It was this that helped lower the status of the woman's signed contract in the eyes of the arbitrator.

“We considered whether the lender had done enough to satisfy their obligations under S9C(3) b of the CCCFA,” the FSCL wrote.

This section requires lenders to “assist the borrower to reach an informed decision …. and to be reasonably aware of the full implications of entering into the agreement.”

To ensure this happens, this section of the CCCFA requires lenders to avoid anything that is, or could be, confusing to borrowers.

There was a question mark over this in the woman's case.

“Although a signed loan agreement is evidence that a borrower understands the terms of an agreement, it was not the only evidence,” the FSCL wrote.

“We were persuaded that when the woman signed the loan agreement, she believed she was agreeing to $155 fortnightly payments.”

FSCL then said the woman was entitled to cancel the debt and return the car. But then a new dispute arose over whether this was done within the required deadline.

Tags: FSCL