What I found even more shocking was the involvement of the National Australia Bank, Australia’s leading private banking institution, and one which certainly ought to know better. In 1989 the NAB suffered a loss of over $300,000 through unconscionable conduct concerning the taking of Guarantees from third party mortgagors to debts in the name of another party. The case is known as GARCIA -v- NATIONAL AUSTRALIA BANK LTD. The circumstances were identical to the two cases noted above and I distinctly recall the issue creating reverberations through the finance industry which virtually created a secondary industry feeding the pockets of solicitors advising borrowers on the implications of Guarantee securities. No bank officer worth his credit reputation would simply drop a Guarantee document in front of a borrower or mortgagor without uttering the caveat statement, “You are perfectly at liberty to take these documents to your legal representative and have their import explained to you before signing. In fact, we recommend that you do so, as the Bank and its staff are not qualified to offer such advice.” Maybe not as verbose, but words to that effect were regarded as du rigour, in fact required by various institutions lending policies following the case.
Once the caveat offer for the borrowers and guarantors to have the Guarantee documents explained to them by their own legal representative, presuming they declined and simply wanted to sign up and leave, the bank officer was required to complete a diary note of the meeting, detailing all that was said, the borrowers/guarantors reactions and what transpired. Said diary note was then appended to the customer file as a permanent record.
Clearly, in the ten-odd years since I left retail banking, standards have slipped back into the bad old ways. I found myself scoffing at a report on AM this morning laying the blame for the acceleration of personal debt levels in this country at the feet of shoddy lending practices of bank and non-bank lenders. Perhaps I scoffed too soon. Perhaps, with shrinking staffing levels in the finance industry over the last ten to fifteen years, it’s not just the physical people who are no longer around. Judging by this unconscionable return to the bad old days of the eighties, the industry has lost knowledge and experience as well as the people. I think it’s disgraceful and disgusting. Lending is a professional undertaking to be engaged in by knowledgeable, authoritative and responsible people, not process driven, book-learnt box-tickers.
If standards have slipped this much, I’d strongly recommend that borrowers adopt a very wary and personally prudent attitude to signing anything dropped in front of them by a supposed lender or lender’s representative. Take everything to your solicitor to be signed, people. Clearly, the necessary experience and responsibility just doesn’t exist in the Banks any more.