A recent decision in the Supreme Court of Victoria (Australia and New Zealand Banking Group Ltd v Chuc Hong NGO [2022] VSC 713) sets out decisions made by the Customer Advocate that benefitted the bank customer.

Beginning in January 2015 the ANZ advanced to Mrs NGO a business loan facility of $220,000, a residential loan of $591,431.94 and to her company an overdraft of $24,500. This overdraft was increased on two occasions. Each of the loans went into default.

Following a complaint by Mrs NGO the Customer Advocate found that the first increase in the overdraft on 19 May 2015 to $74,500 and the second on 23 September to $124,500 should have raised red flags and concluded that ANZ did not comply with its obligations as a prudent and responsible lender in relation to the increases. The customer Advocate recommended that ANZ write off the balance of the overdraft facility (being $178,498.60).

The Customer Advocate made no criticism of the Business loan.

In relation to the residential loan the Customer Advocate found that the loan was not serviceable by Mrs NGO and as such did not comply with the bank’s responsible lending obligations.

The Customer Advocate recommended that ANZ recover only the principal advanced.

While there is no obligation on the ANZ to adopt the recommendations of the Customer Advocate they usually do. They did so in the case of Mrs NGO including during the course of subsequent court proceedings for the recovery of money owing.

It should be noted that while Judge Osborne commended the ANZ he made it clear that he would have decided the matters determined by the Customer Advocate differently had he been asked to do so.

The experience of Mrs NGO highlights the value of raising with one’s bank issues or problems that arise in the banking relationship.