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BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.


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BFCSA: Westpac’s decision to keep $100,000 ‘an abuse of power’

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Westpac’s decision to keep $100,000 ‘an abuse of power’

Australian Financial Review May 25 2018 5:31 PM

James Frost


Westpac's decision to deny a customer's access to $100,000 of their own funds was inappropriate, unfair and an abuse of power the Hayne royal commission has heard.

 Small business lenders at the Bank of Melbourne pushed through a loan for a commercial enterprise as a residential mortgage in order to meet sales targets and secure a bonus.

That decision set off a chain of events that would lead the bank to place a "hard hold" on a customer's funds in a term deposit held by the bank some years later.

Counsel assisting the royal commission Rowena Orr, QC, said the bank took advantage of the customers who needed to discharge the mortgage on one property in order to acquire a family home and start a new life on the Gold Coast.

"By withholding the $100,000 from Mr Wallis and Mrs Wallis the bank acted unfairly towards Mr and Mrs Wallis, didn't it? It was an abuse of power in its relationship with Mr and Mrs Wallis, wasn't it?" Ms Orr asked Westpac's head of commercial banking Alastair Welsh.

She asked whether the bank breached its duty in the banking code of conduct to act fairly.

"Yes, we didn't act fairly, that is my view," he said.

The lenders from Westpac subsidiary Bank of Melbourne were compelled to categorise the loan as a residential loan because its loan to valuation ratios were less stringent for residential property.

Bank of Melbourne would only offer the Wallis's a loan of $419,000 under a business loan at the maximum LVR of 65 per cent but ultimately would grant the customers a residential property loan of $516,000 with an LVR of 80 per cent. None of this however was communicated to Mr Wallis or his wife.

The banker who initally sought to have the property classifie as residential - Arthur Athanasopolos - had incentives that included 40 per cent for revenue growth, 20 per cent for asset growth and 10 per cent for deposit growth.

Westpac's Mr Welsh agreed that the bonus scheme would have been a contributing factor in the decision making of Mr Athanasopolos.

The bank would later reconsider its decision, reclassify the property and withhold $100,000 the customer generated from the sale of another property in order to make up the shortfall after placing their funds under a "hard hold", according to emails presented to the inquiry.

Ms Orr took Westpac's Mr Welsh through the chain of events that led the bank to attempt to garnish the money after the couple decided to sell an investment property in Port Macquarie and start a new life on the Gold Coast.

"I want to put to you squarely that the bank took advantage of the fact that Mr and Mrs Wallis needed the discharge of the mortgage on the Port Macquarie property, so time was of the essence, and they took advantage of that and pressured them to agree to the retention of the $100,000".

Mr Welsh agreed it was unfair but was unable to confirm of whether those individuals responsible for the garnishing of the $100,000 had been subject to any disciplinary actions.

"Our banker made the wrong call and they, in my view, this should have been, this was a commercial property and it should have been valued as a commercial property" Mr Welsh said.

The Financial Ombudsman Service would also examine the circumstances that led to the freezing of the couple's account which it described as "inappropriate and unfair" in its assessment.

At the conclusion of Mr Orr's examination of Mr Welsh, Commissioner Hayne mused the fairness of loan agreements with all monies clauses or the idea that a security is being used against multiple debts.

Mr Welsh said he believed most business owners were well informed however Commissioner Hayne suggested it was not likely to be well understood by all small business owners.


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