Bookmark and Share
Previous article

News Articles

  • NAB landmark court case could have far-reaching consequences for consumer banking
  • By Amy Bainbridge and Alison Branley
  • 23/07/2016 Make a Comment
  • Contributed by: Sammy_D ( 3 articles in 2016 )
A court has ruled National Australia Bank did not properly inform a customer who went guarantor for $8 million in loans, meaning he would not have to pay back money still owed.

In a decision that could have wide-reaching ramifications for banking, the Supreme Court of Victoria has upheld a decision that banks are legally bound to adhere to an industry code of practice, even though it is voluntary.

The case centred on the businessman behind iconic safety helmet Stackhat, John Rose.

Mr Rose and his business partner took out $8 million in loans to buy Gold Coast investment properties in 2007.

At the time Mr Rose thought he was responsible for his half share of the loans but signed documents that stipulated he was responsible for their entirety.

He signed loan guarantee documents during a 15- to 30-minute meeting where the bank's representative talked him through the relevant places to sign.

However, in 2010 when the business defaulted on the loans and the properties were sold, NAB came looking for remaining $3.8 in million loans entirely from Mr Rose.

Guarantees a 'breach of code of practice'


Mr Rose counter-sued the bank for the remainder of the debts.

He said he was never properly informed about the nature of the guarantees he signed and this was a breach of the code of practice.

The code stated that NAB had to give Mr Rose "prominent notice of various matters" before taking a guarantee from him.

Mr Rose told the court the documents were not left with him overnight, he was not explicitly alerted to his level of risk and he was not advised to get independent legal advice.

Chief Justice Marilyn Warren and Justice Stephen McLeish of the Victorian Court of Appeal dismissed NAB's appeal of the original case.

"We would respectfully agree with the trial judge's conclusion that those clauses of the Banking Code had contractual force as terms of the guarantee at issue," they wrote in their judgement.

Mr Rose's counsel Grant Walker from legal firm Madgwicks' said it was a landmark decision and would "have far-reaching consequences for consumer banking".

"And will add to the already significant pressure on large banks to improve their product disclosure practices."

In a statement a spokeswoman for NAB said it was committed to doing the right thing by its customers and took high standards of professional conduct seriously.

"That's why we are making strong contributions to each of the six initiatives announced by the Australian Bankers Association to deliver the right outcomes for customers," she said.

"This includes the independent review of the Code of Banking Practice."

Source: https://www.abc.net.au/news/2016-07-22/nab-landmark-court-case-could-have-far-reaching-consequences/7653414


     4+9= 
    (Note: If wrong - comments will not be posted)
    Footnotes:

    1Will not be visible to public.
    2Receive notification of other comments posted for this article. To cease notification after having posted click here.
    3To make a link clickable in the comments box enclose in link tags - ie.<link>Link</link>.

    To further have your say, head to our forum Click Here

    To contribute a news article Click Here

    To view or contribute a Quote Click Here

    Hosting & Support by WebPal© 2019 f4joz.com All rights reserved.