Australian widow $1 million in debt, bank found irresponsible over loan
In their 44 years of marriage, Australian man Peter Low often handed his wife documents to sign.
Like many in a marriage, Jennifer Low never bothered much with the fine print and, trusting her husband, always signed the dotted line.
But her decision to disengage with their financial dealings would be one she would regret, when Mr Low died unexpectedly and five outstanding bank loans in excess of A$1 million (NZ$1.1 million) were revealed.
"Mum had no idea. There were five loans of over A$1m, and her name was all over the paperwork," said their son Rien Low.
Now Rien and his mother are locked in a dispute with Australia's Suncorp Bank, stretching into its 14th month.
The uphill battle took a turn this year when the Financial Ombudsman Service (FOS) found Suncorp acted irresponsibly in issuing one of the loans of A$240,000, which the family now claims was provided on the basis of a false tax return.
Mr Low, an explosives technician, was 64 when he was killed in a workplace accident in Melbourne in 2015.
Rien, 39, says his father's unexpected death rocked the family, and brought with it "emotionally taxing" financial stress.
"If you are obtaining a loan with a partner, the broker must ensure the partner is present and across everything. But for these loans not one email, phone call or letter was sent to my mum. She only ever met the broker once."
Rien and his mother turned to FOS to understand why the bank issued the loans in the first place.
In its determination, FOS found Suncorp was not irresponsible in advancing the first four loans "because [the Lows] could afford them" at the time.
However, for the final business loan in 2014, FOS found Suncorp had failed to make "adequate enquiries about the purpose of the loan", nor did it control the use of the funds.
It also criticised Suncorp's "assessment of affordability", determining that the bank must refund and cease charging any interest and fees accrued on the loan.
After receiving the determination, the Low family compared documents obtained by FOS from the bank and found that the 2013 tax return used for the final loan was not the same as that within Low's business records.
Rather, it showed his gross earnings for the year were A$400,000, almost 10 times his average true earnings.
"Surely this would have been a red flag to the bank, when his earnings jumped 10 times for one year only," said Rien, adding that FOS refused to consider the conflicting tax return, because it was discovered after it had completed its review.
The Low family has since filed a report concerning the broker with the Credit Investment Ombudsman, alleging unconscionable conduct and irresponsible lending.
Rien and his mother remain at a standstill in negotiating repayment for the final loan, after suggesting they "pay back the loan at the same rate the bank had always charged", minus the interest.
But Suncorp has rejected the offer and demanded full payment (minus the interest) by June next year.
Rien said he "struggled to see" how the bank could demand payment within such a period, considering the loan was deemed "irresponsible".
A spokeswoman for Suncorp said it could not comment, as the matter remained under review.
"Suncorp will accept the Ombudsman's decision and meet all requirements of any further determination," she said.
Australia's Consumer Action Law Centre solicitor Jesse Marshall said the situation spoke to the "inadequacy of irresponsible lending remedies".
"This is a case where the bank is found to do the wrong thing ... and the only remedy the consumer gets is a waiver of fees and charges," he said, adding that the repayment plan suggested was reasonable.
"Because the loan was provided irresponsibly, she should be able to continue making repayments, as before."
Marshall urged consumers to seek help from a community legal centre where they have a complex complaint, prior to approaching the Ombudsman.
- Sydney Morning Herald