Allegations: The Safetli family says it has been misled into grave debt by the NAB.
Source: AFP: Greg Wood)
NAB accused of unconscionable conduct.
Several banks, NAB in particular, face complaints of unscrupulous lending behaviour in cases in which customers claim they have been forced to the wall after being persuaded to sign complicated loan guarantees they could neither afford nor understand.
The lending practices of the big banks are also coming under increasing scrutiny, with two influential federal parliamentary committees and the corporate regulator, ASIC, all intensifying their inquiries.
The claims come as growing numbers of Australians sink further into debt, leading to what has been dubbed "mortgage stress".
The Safetli family knows what it is like to lose almost everything to the bank.
When NAB foreclosed on their loans, husband and father Haissem Safetli, even lost his grip on sanity.
"I completely lost the plot," Mr Safetli said. "I lost my mind, I lost everything. I lost all feelings that I have left in this world."
His wife, Amanda, says the successful businessman had a complete breakdown.
"He ended up in a mental health facility trying to take his own life," she said.Source: ABC
Before their financial ruin, the Safetlis thought they were building their wealth on solid foundations, but they now say NAB's banking practices brought it crashing down around them.
The question worrying authorities now is how many other Australians could be in the same situation?
$800,000 mistake
The Safetlis are in financial limbo. As their dispute with NAB has dragged, Mr Safetli has tried to make a living out of selling tyres from his home garage.
He says his troubles began when NAB itself overextended finance to his wholesale tyre company under an existing trade refinance and credit facility.
In its ultimate notice of termination and formal demand, the bank admits it made an $800,000 mistake.
But according to the Safetlis, that didn't stop the bank demanding immediate repayment.
The money had already been spent on new stock. The family's cash problems only got worse as the bank began seizing assets, triggering a cascading series of loan defaults.
"At any time, we could have sold assets and paid off the bank," Mr Safetli said. "The problem you have with the banks is when they grab you, that's it, you're finished."
Homes lost
It might have been just another of the scores of business collapses that occur every year but authorities are especially concerned about what happened next.
Mr Safetli's mother, Faouzia, and her daughter-in-law claim the family's bank manager asked them to come to his office to sign some routine documents.
"He put all the papers in front of me," Faouzia Safetli said. "'Sign here,' I sign, that's it. 'Thank you very much.' That's it."
Amanda Safetli says she has realised in hindsight she should have checked what they were signing.
"My mother-in-law has limited English, limited reading," she said. "You walk into the bank, they give you a wad of documents, say 100 pages, and the little tabs say, 'Sign here, sign here,' and you do it."
What both women claim they were never told is that they were in fact signing binding personal guarantees over the loans mistakenly made to Haissem Safetli's tyre business.
Those guarantees would shortly afterwards see them each lose their homes.
Faouzia Safetli says nobody told her to seek legal advice before signing the document.
"I end up with nothing. My son - he end up with nothing," she said. "We all end up with nothing - our kids, his kids."
ASIC concerned
An independent advocate who helps people like the Safetlis resolve disputes with the banks, Bruce Ford, says the claims raise very serious questions about NAB's internal practices.
"The NAB and all banks are obliged at law to provide consumers to obtain independent legal advice prior to granting a guarantee," Mr Ford said. "That wasn't followed through with Mrs Safetli."
The corporate watchdog, the Australian Securities and Investments Commission (ASIC), shares the concern, as it makes clear to the bank in this letter: "NAB's knowledge of Mrs Safetli's level of understanding and the lack of any opportunity afforded to Mrs Safetli to obtain legal advice raises concern about unconscionable conduct by NAB."
Perhaps more seriously for the bank, ASIC is also concerned about NAB providing false evidence about the matter.
The bank told the watchdog: "Statutory declarations which stated that she had received independent legal advice were ... false and known to be false by the NAB."
Track record
NAB likes to advertise itself as an organisation responsive to the needs of its customers but the bank's critics say it has a bad track record.
"They've been prosecuted four times previously," Mr Ford said. "This is the fifth time now that the bank is under scrutiny for those precise things."
In fact, in 2001, the Federal Court ruled that NAB had acted unconscionably in the case of a Tasmanian woman left in charge of her husband's business after he had suffered a serious head injury.
In his absence, she signed what the bank told her were "routine papers". They were anything but - what she signed was a personal guarantee over the home.
The Australian Competition and Consumer Commission (ACCC) took action, alleging in court the bank did not explain the consequences of the guarantee to her, nor did it reveal that her husband's business was already in serious financial difficulty.
The ACCC said that not long after, the bank told the woman she had to sell her house to meet the personal guarantee.
As a result of that case, NAB consented to orders it would in future ensure its customers had the opportunity to obtain legal advice before signing guarantees.
But Mr Ford says the Safetlis' claims are history repeating.
"There's got to be alarm bells ringing for the regulator to say, 'Why are we here again after the ACCC's prosecution for precisely the same thing?'" Mr Ford said.
More allegations
Sydney pharmacist Voula Amassah is also locked in dispute with NAB, again over an agreement that she claims was never properly explained to her.
Ms Amassah says she lost her family home and other assets after her husband arranged a loan from the bank.
"I discovered that the loan had actually been rejected and the only way that it had been passed was by putting it in joint names and using my properties as security," she said.
Mr Ford says she was asked to sign up to it under "a certain degree of duress or stress".
"But she had no knowledge of the joint loan in her name until she got to the bank," he said.
Ms Amassah has since separated from her husband but says she is still angry with the bank for keeping her in the dark.
"Basically, I went in to sign a loan document," she said. "I wasn't given a copy of that document. I wasn't even given any statements when the mortgage was put into place, and that ended up being a financial disaster for me, a complete financial disaster."
Senators worried
The chairman of the Federal Parliamentary Committee on Financial Services, Liberal Senator Grant Chapman, says such practice would be inappropriate.
The committee has been on the receiving end of complaints about the banks.
In a written response to one, Senator Chapman notes that the allegations of malpractice and unconscionable conduct suggest a number of banks continue to engage in practices that appear to be seriously flawed.
"We want ASIC to thoroughly investigate each of these cases, come back to us with the details of their findings and then we'll make some decisions from there," he said.
But Opposition committee members like Senator Nick Sherry are not as confident with ASIC's ability to bring the banks to task and have accused the regulator of dragging its feet.
"Basically, when has ASIC examined the operations of internal dispute processes in, let's say, the four major banks?" he said.
"I have raised this issue on ... two or three previous occasions. I don't seem to be getting anywhere with some very clear definitive statistical, factual response."
'Debts unknown'
A complaint common to many who have defaulted on their loans is that their banks won't provide them account statements with a precise figure on how much they owe. That's despite banks like NAB vowing in its advertisements to its customers to tell it how it is.
Mr Safetli says his family is still trying to find out from the bank how much it owes.
"Write them a blank cheque - that's what they want," he said.
The ABC approached NAB for its response to the claims being made about its lending practices, but the bank declined to comment, saying that to do so would breach the privacy of its customers.
However, a bank spokeswoman did say the bank makes every effort to work with customers to resolve any disputes, and it will cooperate fully with any inquiries that are launched into that process.
But for their part, the Safetlis remain unconvinced by those reassurances.
"They're the ones that tell everybody what to do," Mr Safetli said. "They can do anything they want, any time they want and it's about time somebody just put a stop to it."
Source: ABC
