Powered by MOMENTUM MEDIA
subscribe to our newsletter

Banks ‘withheld’ information from clients to avoid claims

Customers have accused banks of withholding information from clients to prevent legal claims of misconduct.

In a roundtable discussion initiated by the Australian Labor Party (ALP), alleged 'victims of misconduct' revealed that banks withheld information from clients to avoid litigation.

In its submission to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, following the release of Commissioner Kenneth Hayne’s interim report, the ALP said that several participants in the roundtable discussion accused the banks of withholding information during disputes to prevent clients from making claims of misconduct.

“In some cases, this involved withholding of documents requested through internal disputes or the [Financial Ombudsman Service] process, unavailability of call recordings which customers believed would prove their claims, or unavailability of particular witnesses from the bank to be examined in court about their actions,” the ALP told the commission.

The ALP continued: “A concerning number of participants reported that banks had withheld or failed to provide information that the participants believed was essential to ensuring a just outcome in their case.”

Advertisement
Advertisement

The Labor Party claimed that the issue is “inextricably linked” to the broader concerns that participants raised during the course of the roundtable discussion, which included concerns regarding:

  • the cost of litigation,
  • the financial and costs pressures on customers, and
  • the pressure to settle for less compensation than they appeared legally entitled to.

“Each of these matters speaks to an imbalance between banks and customers in dispute resolution processes, and a tendency by the banks to exploit this imbalance to minimise compensation paid to customers, even where misconduct is acknowledged or is plainly evident,” the ALP claimed.

One client from Perth, Western Australia, said: “You are completely helpless, you have no control. But the banks have all the control.”

According to the ALP, other findings from the roundtable discussion included:

  • severe impacts on victims (mental health, suicide, physical health, losing family) without reasonable and fair-minded offers of compensation
  • legal system not bringing justice for customers
  • external dispute resolution (EDR) schemes not working adequately
  • banks, valuers, liquidators and receivers targeted victims during the global financial crisis
  • inadequate hardship policies
  • banks choosing litigation processes instead of reasonable settlement with victims
  • lack of accountability and inappropriate behaviour by bank staff
  • inadequate remediation of consumers
  • lack of time for bank victims to have a voice in the process

[Related: Bank fears consequences of stronger lending laws]

PROMOTED CONTENT


Banks ‘withheld’ information from clients to avoid claims
Magnifying glass
mortgagebusiness

Are you a new-to-industry broker in the process of growing your business? Then there’s some great news: The Adviser’s New Broker Academy is back in 2021 and will provide you with essential insights into cutting-edge tools, strategies and processes to fast-track to success. Don’t miss your chance to attend. To secure your FREE place, visit newbroker.com.au now!

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

True Savings, a new online brokerage headed by former CBA executive Pete Steel, has entered the Australian mortgage market. ...

Pre-registrations have opened for Citi’s upcoming buy now, pay later offering, Spot., which will launch in October. ...

New Zealand’s central bank is primed to further tighten mortgage lending standards, following concerns with a rise in high-LVR and high-DT...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.