Media release: Questions raised about students’ entitlement to refund of NAB loans

The Consumer Action Law Centre is urging consumers who took out loans with the  National Australia Bank to pay for course fees with the College of Creative Arts and Technology, and who did not get to complete their course due to the college’s closure in 2009, to request the Australian Financial Complaints Authority (AFCA) investigate their loan to determine whether it is ‘linked credit’ within the meaning of the National Credit Code. AFCA would need to consider the evidence and decide whether the ‘linked credit’ laws applied.

The call comes after Consumer Action recently became aware of NAB customers who had taken out loans to pay tuition fees at the Hawthorn-based College of Creative Arts and Technology, in circumstances which suggest the loans may be a tied credit contract. A ‘tied credit contract’ may arise where there is an arrangement between the lender and a service provider about the provision of credit to pay for goods or services.  Where there is a tied credit contract, and the purchased goods or services are not provided because, for example, the service provider goes out of business, the loan contract can be terminated by the borrower.

The College of Creative Arts and Technology stopped trading in September 2009 leaving students unable to complete their studies with the college.  Consumer Action is urging consumers to request the Ombudsman to consider whether they had the right to cancel their NAB loans as a result.

Catriona Lowe, co-CEO of Consumer Action said that, if the College of Creative Arts and Technology had an arrangement with the NAB or any other bank to refer students to it for loans, there may have been tied credit contracts which should have become void when the College stopped trading.  She called for former students of the private college to seek legal advice about their position.

‘Many consumers take out loans and think they’re committed to the repayments even if they never receive the product or service they were buying. But if the contract between the customer and the service provider is terminated, and the credit is a tied credit contract, it is possible the credit contract can also be terminated,’ said Ms Lowe.

Consumer Action was involved in a high profile linked credit case in 2009 when whitegoods retailer Kleenmaid went into liquidation. In that case Consumer Action acted for a client who recovered over $9,000 paid to a linked credit provider of Kleenmaid.

‘We’ve seen a number of tied credit matters over the last few years, and it is clear that consumers often aren’t aware they have some protections.   So when we were presented with this case, we wanted to ensure that all affected students understood that they may have legal rights.   We are also keen to understand the scope of linked credit issues generally so we urge consumers who may be in similar circumstances to contact Consumer Action and tell us their story.

Note: Consumer Action has published a self help sheet to assist customers who think they may have rights in relation to this matter. To obtain a copy, please email   with the subject line: NAB & College of Creative Arts and Technology


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