FSCL calls out irresponsible lenders

FSCL calls out irresponsible lenders in latest annual results

FSCL calls out irresponsible lenders
Lenders are largely meeting their obligations to borrowers, but a few bad eggs are causing real harm to consumers, according to the latest report from Financial Services Complaints Limited (FSCL).

The report showed that lenders and finance companies attracted the most complaints and enquiries of the record 4,365 received in the year ended in June, this is 25% of the 213 cases investigated.

FSCL CEO officer Susan Taylor said: “While it appears most lenders are meeting their obligations under the revised credit laws that came into effect in mid-2015, we have seen a few complaints where a lender has failed to comply with its responsible lending obligations.

“Typically, this has involved a lender not making reasonable enquiries into whether a borrower will be able to make loan repayments without suffering substantial hardship,” she said.

The report also detailed a case where a lender failed to meet its responsible lending obligations when entering into a loan top-up agreement with a borrower who had guaranteed her son’s car loan.

A finance company accepted Wendy’s, the mother, guarantee of her son’s loan, who later defaulted leaving the mother to complete his repayments. The mother brought her case to FSCL, which negotiated a settlement with the lender.

“We found two key issues: the finance company’s acceptance of Wendy as a guarantor for her son’s new loan, and the top-up transferring Luke’s loan balance to Wendy’s loan account.”

“The case is also a reminder to anyone considering guaranteeing a loan – whether for a friend, family member, or business colleague – to think very carefully about what it means. It is best to seek independent legal advice and to consider how your financial position would be affected if you were called upon to make the loan repayments,” Taylor said.


Related stories:
FMA urges investors to use a licensed provider
Industry reacts to report on insurance churn