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Kat on the Kouch casework problem solving

Kat on the Kouch casework problem solving . Kat Lane 12/9/13 at the FCRC Conference. Consumer Credit Legal Centre (NSW). www.cclcnsw.org.au contains lots of fact sheets and sample letters NSW contact point for 1800 007 007

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Kat on the Kouch casework problem solving

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  1. Kat on the Kouchcasework problem solving Kat Lane 12/9/13 at the FCRC Conference

  2. Consumer Credit Legal Centre (NSW) • www.cclcnsw.org.au contains lots of fact sheets and sample letters • NSW contact point for 1800 007 007 • Operates the National Insurance Law Service ph: 1300 663464 also at www.insurancelaw.org.au. • New websites to be launched soon with more resources

  3. This session is interactive! • Ask questions • I am at the conference both days so if you need to talk casework find me and talk to me • There are no stupid questions • Don’t be afraid to argue your point

  4. Casework and problem solving – New approaches

  5. What’s new in casework?

  6. What’s coming soon?

  7. Welcome

  8. Today’s Overview

  9. Learning Objectives • Using the new laws • Payday lending/Responsible lending • transition • EDR (as always) • Remembering time limits • Managing risk

  10. Problem solving • What is the problem? What does the client think the problem is? • Risk Management • What do we need to know • What is the solution going to look like? Realistic options? • The pathway. What do we do? • Settlement checklist?

  11. Casework problems

  12. The National Consumer Credit Protection Act – the big changes

  13. Case Study 1 Eva’s sole source of income is the Centrelink Disability Support Pension. Eva got involved in using payday lenders over 3 years ago when she could not pay her car registration. Since then she has had to keep reborrowing with various payday lenders. She has had 20 loans with 3 payday lenders over the past 4 years.

  14. Discussion • Responsible lending • Henderson poverty index • Financial hardship and payday loans? • Time limits • EDR • The new caps • Credit reporting

  15. The payday loan responsible lending equation: Amount of income: $ LESS Rent: $ Loan repayments (total) $ EQUALS (amount left for basic living expenses) = $ Is the amount below Henderson Poverty Index?

  16. Settlement checklist • Refund of money if repaid more than benefit received • Repayment arrangement if owe money. Repayments must be affordable. • No default listed on credit report • Monthly repayments

  17. Resources • Financial Counselling Australia fact sheetwww.financialcounsellingaustralia.org.au/login • Henderson Poverty Indexhttp://melbourneinstitute.com/miaesr/publications/indicators/poverty-lines-australia.html • Credit Law Toolkit available at www.legalaid.nsw.gov.au.

  18. Case Study 2 Garry and Judy are both in their late 50’s. Their children are grown. They needed some money for renovations in 2009 so they approached the bank for a home loan. A loan of $50,000 was granted secured against their home. They could afford the repayments. The term of the loan is 25 years. Since then Garry and Judy have arranged two $20,000 increases in late 2010 and early 2011. Both are starting to have health problems and are now thinking about retirement.

  19. Discussion • Unjustness? • Responsible lending? • Financial hardship • Benefit • The effect of Cook v. Permanent Mortgages? • EDR • Time limits? • Credit reporting? • Options?

  20. ASIC Regulatory Guide 209: Responsible Lending Conduct RG 209.103: Under the National Credit Act, it is presumed that, if a consumer will only be able to comply with their financial obligations under the credit contract or consumer lease by selling their principal place of residence, then the consumer could only comply with those obligations with substantial hardship, unless the contrary is proved: see s118(3), 131(3), 142(3) and 156(3). The effect of this is that where a consumer establishes that they could only meet the payment obligations by selling their home, then the onus is on the credit provider, lessor or credit assistance provider to establish that the credit contract is ‘not unsuitable’. The law allows you to exercise judgement in the application of this requirement

  21. Settlement checklist • 6 months to exchange contracts for the sale of the home OR • Extend the term of the loan and reduce repayments (only if affordable) • A refund of legal fees, default fees to the loan. Possible refund of part interest as compensation. • No default listed on credit report

  22. Resources • RG 209 at www.asic,gov.au • Responsible Lending position statement at COSL www.cosl.com.au • Various statements at FOS website on maladministration at www.fos.org.au

  23. Case Study 3 John needed a washing machine and television. His sole source of income was and is the Disability Support Pension. He approached BIG RENTAL COMPANY. He ended up renting a washing machine, a dryer, a sound system, a DVD player and a TV. He was told it was a rent/try/buy deal. He is now struggling to pay the rental costs and the lessee is trying to repossess the goods.

  24. Discussion • Do the new laws help? • Responsible lending? • Ownership of the goods? • Financial hardship? • Termination fees? • EDR • Options?

  25. Rent/try/buy • Misleading • If the consumer wants the item you need to negotiate purchase of the item • If the consumer has sold or lost the rental goods it is tricky. Keep paying and negotiating

  26. Recent ASIC action on termination fees (2.12) Enforceable undertaking with Mr. Rental. The termination can be unfair if: • An additional fee can be charged • The fee is not disclosed • The consumer has no way to calculate the fee

  27. Settlement checklist • Affordable repayment arrangement • A right to buy the goods for an agreed price • Refunds of fees and other costs • No termination fee • No default listed on credit report

  28. Resources • Mr. Rental Enforceable Undertaking http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/027728572.pdf/$file/027728572.pdf

  29. Questions?

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