In October 2018, Hayley contacted FSCL complaining that her lender did not follow the correct process in assessing her financial hardship application. Our early assistance team referred the complaint to the lender, and the complaint resolved through the lender’s internal complaints process. Hayley and the lender reached an agreement about how Hayley would pay her loan, and FSCL did not need to investigate her complaint.
In July 2019, Hayley contacted FSCL complaining that the lender did not follow the correct process in implementing the agreement reached in 2018. Specifically, Hayley said the lender:
- communicated poorly
- did not properly assess Hayley’s ability to pay the loan in 2018
- did not provide Hayley with the correct paperwork after the agreement was reached, in particular, documentation to record that Hayley’s payments were to reduce from $158 to $140 per week.
In August 2019, Hayley proposed that she would start making weekly payments of $150 towards her loan, conditional on the lender:
- sending her documentation to confirm the changes
- clearing her arrears
- agreeing not to take repossession action.
The lender did not agree with Hayley’s proposal, and Hayley complained to FSCL.
It transpired that Hayley had not made any payments towards her loan since October 2018 (approximately a year). However, the lender decided it would be willing to consider Hayley’s August 2019 proposal, if Hayley could actually afford to pay $150 per week, and if it was viable for her loan term to be extended.
The lender gathered information about Hayley’s financial position, and waived the default interest that had accrued on the loan ($625). It also put forward three options for Hayley to pay her loan, and avoid a loan term extension:
- Pay a lump sum of $7,500 and 190 weekly instalments of $145.
- Pay a lump sum of $3,500 and 190 weekly instalments of $173.
- Pay 191 weekly instalments of $197.
Hayley considered that the lender had not followed the correct process in relation to her 2018 complaint, and that it should simply agree to her August 2019 proposal.
Under FSCL’s terms of reference, we can decline to continue investigating a complaint where a participant has made a reasonable offer to resolve a complaint. In this case, we considered the lender had made a reasonable offer because:
- despite any alleged deficiencies in the lender’s process in 2018, this did not relieve Hayley of her obligations to make payments towards her loan
- the lender had undertaken a fair assessment of Hayley’s financial position before making the offer. The third option the lender put forward was affordable, because Hayley had a fortnightly net surplus of $450
- Hayley had benefitted from not paying her loan for a year, and from the lender waiving the default interest.
Alternatively, we told Hayley she could consider surrendering her vehicle (which secured the loan), to the lender. The lender could sell the vehicle, apply the proceeds of sale to Hayley’s loan balance, and the residual debt would then be frozen. We could help Hayley and the lender reach an agreement about how Hayley would pay the residual debt.
Hayley did not accept the lender’s offer, or consider the alternative of selling the vehicle, and disengaged with FSCL’s process.
Insights for consumers/participants
FSCL’s process is not punitive. This means that in resolving complaints, FSCL will not ‘punish’ participants, which is what Hayley was hoping to achieve in pursuing her complaint.
In any event, Hayley’s allegation that the lender did not send her the correct paperwork was out of proportion with the ‘punishment’ Hayley sought from making a complaint (that the lender would simply write off the arrears). The lender’s alleged error also did not mean that Hayley was entitled to stop paying her loan (for an entire year).