From the outset, consumer-related lending was a focus of concerns raised with the Commission about potential misconduct or conduct falling below community standards. This was reflected in the information received from members of the public, regulators, external dispute resolution bodies, consumer advocacy groups (notably CHOICE, the Consumer Action Law Centre and Financial Rights Legal Centre) and by the financial services entities.
These concerns were reflected in the Commission’s decision to make consumer lending the subject of the first round of public hearings, with particular focus on:
- home loans;
- car loans;
- credit cards;
- offers of pre-approved overdrafts and credit cards;
- processsing and administrative errors; and
- add-on insurance products.
In addition to these products, the Commission received many submissions relating to other personal finance issues, including transaction and savings accounts and associated fees, ATM fees and availability, and other general personal banking and finance services.
Many of the submissions that related to consumer lending and personal finance involved dealings with the big four banks. However, a wide range of smaller authorised deposit-taking institutions (ADIs), brokers and intermediaries were also mentioned.
These submissions ranged from people’s experiences with making an application for a first home loan or a large personal loan through to experiences relating to everyday banking. The submissions included concerns about fees and charges, and the terms and conditions for consumer products, including changes made to these after a person had signed up to a product. The volume of submissions received highlighted not only the frequency of consumer enagement with financial services entities but also the impact of dealings where a consumer felt they had not been treated honestly or fairly.
The submissions included stories of the significant emotional toll of disputes with financial services entities where people had loans approved for which they were ultimately not able to meet the repayments. This often resulted in the loss of a family home, breakdowns in relationships, and ongoing debts arising from penalty interest rates, legal processes and other costs associated with pursuing redress. Some consumers reflected that they had been offered additional credit without asking for those funds, and regretted taking on larger loans than they could afford. Others spoke of being loyal customers for many years, and that such trust and loyalty was not reciprocated in their dealings with their bank.