Protecting guarantors from financial abuse
In our feedback to the Banking Code Compliance Committee (BCCC) inquiry into banks’ compliance when accepting and enforcing guarantees, Consumer Action discusses our concerns with guarantee provision compliance, dispute resolution obstacles and co-borrowers that should be guarantors.
Consumer Action has highlighted a number of concerns about how banks accept and enforce guarantees, particularly in relation to elder financial abuse.
Many older Australians are asked to provide guarantees for finance applications, often as a favour to their children. The issues highlighted by our advice and casework include:
- the guarantor signing the guarantee on the same day as signing the loan documents;
- the guarantor being asked to sign the guarantee in the presence of the borrower;
- red flags that should require more inquiries and checks to satisfy a lender of the validity of a guarantee; and
- a lack of access to justice through EDR schemes due to financial caps on guarantee complaints.
You can read the full submission here [PDF].