COSL denies consumers ‘buying time’ with disputes House for Rent Real Estate Articles

COSL denies consumers ‘buying time’ with disputes

October 27th, 2011 | by Lucinda Dodd |

COSL has denied claims by the MFAA of a growing trend of borrowers filing financial hardship claims to “buy time”.

The comments come following Credit Ombudsman Raj Vengas testimony to the Parliamentary Joint Committee inquiry into the proposed NCCP amendments. Venga spoke in support of amendments to the NCCP requiring lenders to respond to hardship applications within 21 days, and to suspend enforcement action until they had informed delinquent borrowers whether or not they would vary payment terms. While the MFAA also expressed support for provisions delaying enforcement proceedings, saying these were already part of its Code of Practice, CEO Phil Naylor claimed in a submission to the inquiry there was a growing trend of borrowers lodging applications to “buy time, rather than because of a bona fide dispute”.

Venga denied this, telling Australian BrokerNews that, while there was evidence of some borrowers taking these actions, it was not prevalent.

The MFAA argued that lenders be allowed to resume enforcement action against borrowers who had filed financial hardship claims if EDRs had not finalised the applications within 60 days. The association claimed borrowers seeking to “buy time” through claims of financial hardship could delay enforcement by months by applying to an EDR. However, Venga stated that COSL processed FH claims quickly.

“COSL is compelled by ASIC’s Regulatory Guide 139 to require lenders to suspend enforcement action when it receives a complaint from a consumer. Given this requirement, we accord FH complaints first priority in our complaint handling process. Consequently, the median number of days it took us to close a FH complaint is 45 days. Thirty-five per cent of the FH complaints were closed in less than 30 days. Those are excellent timelines given our increased case load,” he said.

This increased case load, Venga said, was due to NCCP regulations requiring credit providers, intermediaries and others engaged in credit activity to join an ASIC-approved EDR. He said the regulations have led to a 22% rise in COSL membership in the last financial year, on top of a 46% increase the year before. With this membership spike has come an influx of consumer complaints, Venga said.

“Predictably, the increase in membership numbers has seen a marked increase in the number of complaints we receive. In fact, there was a 72% increase in the number of complaints we received last financial year compared to the previous one. The number of FH complaints increased proportionally,” Venga said.

House for Rent