Category Archives: AGENCIES GROUPS

‘Credit repair’ agencies charge big money for what you easily can do yourself

Hi Nicole, I’m not sure why but I was just turned down for a car loan. I have a steady $80,000-a-year income. I don’t have much in savings but have started putting away $200 a fortnight. I suspect there might be something dodgy on my credit record back from my student days. I called a credit repair service I found – please don’t name them – that says they can clean up my credit file. I’d have to pay $1200 but they say I should be able to get my car after that. Is this a good idea? – Mike, Maroubra

No Mike… if this is not a scam, it’s darn close to it.

Has your debt levels spiralled out of control & gone off the rails? Then read this to FIX it.

So-called credit repair agencies have the same ability to rescue your record as you do yourself. Many will also try and migrate you onto other products – everything from a “budget management” program where you hand over your purse/wallet strings “for your own good”, to a negotiated “debt agreement” (if you were struggling with repayments) that’s extreme and similar to bankruptcy.

For this they’ll charge nose-bleed upfront fees and in many cases hit you with ransom-like, last-minute demands for more money.

But in the words of the Consumer Action Law Centre, which often deals with the messy aftermath: “These predatory companies are flourishing in a regulatory void. The current laws don’t prevent the harm.”

Do this instead Mike

1. Obtain a free copy of your credit report from Equifax (Veda rebranded), Experian or Dunn and Bradstreet. Don’t be fooled into paying for this; you’re entitled to one snail mail copy a year (and Dun and Bradstreet will even email it after a three-day delay).

Also for free you can get your credit rating itself – yes, we’re like the US now with a score and, increasingly, interest rates are based on it – from finder.com.au. But you’ll need to create an account and (as with all such services) should expect emails from them.

2. Go through this with a fine-toothed comb. What’s on there that has hurt you? A bill missed by 60 days or more? Perhaps your name was on a share house utility … and your flatmates skipped out on it? It will be five years before this is expunged from your history – and (sorry) you’ll need to pay any outstanding debt.

3: Checking for errors is the only potential quick fix. Contact the provider first, then its ombudsman if necessary and finally a credit reporting agency to correct the mistake.

Meanwhile, don’t make more loan applications until you’re squeaky clean – they’ll drive your score down further. And take heart: Australia’s consumer ministers have just resolved to look at regulating debt management firms and announced a consumer education campaign to publicise the free alternatives. National Debt Helpline: 1800 007 007 or ndh.org.au.

Nicole Pedersen-McKinnon is a money educator and consumer advocate: themoneymentorway.com. You can write to her for help solving your money problem, or with a consumer question, at nicolehelps@fairfaxmedia.com.au.

Ex-NAB planner banned after stealing $2.3 million, another fights ban

A former NAB financial planner has been permanently banned from the industry after pleading guilty to misappropriating $2.3 million from a client who worked as a nurse.

Patrick Simon Mitchell, of Tasmania, was sentenced to eight years’ jail in March after being convicted of 25 counts of stealing in the Supreme Court of Tasmania.

The charges relate to money stolen through 25 separate transactions from a nurse who had accumulated the funds through inheritance and careful savings, the court heard.

The funds were moved out of her account over four years, during which time Mitchell was a representative of NAB’s subsidiary, MLC.

The Australian Securities and Investments Commission said the ban was effectively immediately.

“ASIC will act to remove people from the financial services industry who act dishonestly and breach the trust of their clients,” ASIC deputy chairman Peter Kell said.

Approached for comment, NAB issued a statement from Garvan Financial Planning, the MLC subsidiary in which Mr Mitchell worked, saying it had alerted police and ASIC to the matter.

“Advisers must do the right thing by their customers at all times, but this was not the case for Mr Mitchell,” Garvan General Manager Matthew Fogarty said.

 

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Mr Fogarty said Garvan was working with the victim to help compensate her.

It comes as the corporate regulator fights to reinstate another ban on a separate ex-NAB financial planner in the Federal Court in Melbourne.

Gerard McCormack, of South Melbourne, was banned for five years by the regulator last year after being embroiled in a case of “mistaken identity” in which he assisted a client forge false withdrawal forms worth $275,000.

Fairfax revealed in January that Mr McCormack instructed his client John Wright to forge his own signature in order to obtain the $275,000, which Mr McCormack believed belong to him but in fact belonged to another John Wright.

Mr McCormack tried to fix the problem without alerting authorities but was banned by ASIC in March last year for misleading and deceptive conduct.

The Administrative Appeals Tribunal overturned the ban in December, deeming Mr McCormack did not have ill intent and did not benefit financially from the conduct.

In an appeal of the AAT’s decision, ASIC told the court Mr McCormack’s case, although bizarre, warranted serious consequences.

“The tribunal hasn’t looked at the conduct, it has looked at the circumstances,” ASIC’s counsel said.

It said Mr McCormack’s conduct was dishonest and that his banning was necessary to promote confidence in the financial sector.

“This is someone, a financial planner, who has deliberately deceived,” counsel said.

Mr McCormack’s lawyers told the court his behaviour was “genuine but misguided”.

“What separates honest and dishonest conduct is the intent,” barrister Rachel Ellyard said.

The AAT overturned ASIC’s ban on Mr McCormack in December, following Mr McCormack’s application for review.

While finding that Mr McCormack did breach the Corporations Act, it found that Mr McCormack’s concern was “solely for that of his client”.

His lack of financial gain and perfect disciplinary record prior to the incident was also taken into account.

Justice David O’Callaghan reserved judgment in the matter.

NAB would not comment on Mr McCormack’s case as the matter was before court.

www.crimefiles.net

www.scamsfakes.com

Henry Sapiecha

Consumer fears raised as Veda credit reporting agency converts from Financial Ombudsman Service to the Credit and Investments Ombudsman

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Experts fear the chances of consumers and business owners having their disputes with credit reporting agency Veda swiftly resolved will be reduced after it switched from the “gold standard” ombudsman to another.

Veda moved from the Financial Ombudsman Service (FOS) to the Credit and Investments Ombudsman (CIO) in November last year.

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It has the right to choose between  the external dispute resolution schemes, but FOS has five times as many full-time employees, half the staff turnover rate, and a better standing amongst financial counsellors, compared to that of CIO.

A Sydney-based credit repair company, that asked not to be named, said it was concerned that business owners wanting to dispute a commercial default listing on their credit files would lose out.

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An incorrect listing can reduce the credit score, lowering the chances of getting a loan at a good rate.

“In our experience of making … complaints, FOS is the gold standard in external dispute resolutions schemes,” she said

“The FOS holds credit providers accountable for their actions beyond the Privacy Act, and includes other relevant codes and rules, [whereas] the CIO limits complaints to the Privacy Act, thereby lessening the scope for accepting disputes.”

Veda said other credit reporting bodies – Dun & Bradstreet and Experian – were with CIO.

Veda is Australia's biggest credit reporting agency image www.money-au.com

“The best outcome is to have a body that understands the complexities of the Privacy Act, the differences between a [credit reporting bureau] and a financial service provider, and arrives at fair and lawful decisions,” Veda’s spokeswoman said.

“Veda now has a number of commercial disputes before [CIO and] we are confident based on their experience … they will arrive at decisions that are both fair and lawful.”

But the credit repair company raising concerns claimed Veda was driven by its bottom line because CIO was likely to accept fewer disputes, saving Veda money.

It claimed that unlike FOS, which accepted disputes based on Veda’s own subscriber rules, CIO was unlikely to accept complaints about commercial credit (for business, not personal purposes) because this did not fall under the Privacy Act.

“This means a vital protection for commercial borrowers has been lost, and commercial credit providers can literally slap on a default notice of any amount over $100 with no notice, no contact, no delay, and no Ombudsman service to hold Veda accountable,” she said.

Credit repair agents charge a fee to resolve default listings, and fewer opportunities to lodge a dispute would also hurt their bottom line.

Veda has previously complained that credit repair groups were misusing FOS’ services by automatically disputing every entry on their client’s credit report without regard to whether or not the information was accurate.

The independent Ramsay Review is currently examining dispute resolution and complaints bodies in the financial sector and it recently made a draft recommendation that FOS and CIO be merged.

FOS wants to merge, while CIO believes two schemes allow price competition and service quality comparison.

In 2015-16, FOS had about 13,600 members, including the big four banks and insurers. Seventy-eight per cent were “small” or “very small” businesses.

In the same period, CIO had about 23,000 members, 97 per cent of which were sole traders, partnerships or small businesses. Most are brokers.

Raj Venga, CIO’s chief executive, said its funding model better allowed credit reporting members to respond to the threat of “unscrupulous” operators lodging baseless claims that attack the validity of default listings.

He denied claims that CIO would accept fewer complaints because of a smaller scope.

“We consider complaints by reference not only to the law, but also to applicable industry codes, good industry practice and fairness,” he said. “We can, and do, deal with complaints from commercial borrowers and business owners.”

A joint submission by consumer groups supported the idea of a single scheme. It said there were concerns about delays at CIO, its “hands off approach”, and “at times, poor quality decision-making”.

“These problems undermine its effectiveness and cause consumer detriment,” the joint submission reads.

“Consumer Action reports that, in some disputes, clients achieve a faster and better outcome by taking their dispute to court instead of CIO.”

However, it also listed problems about FOS.

A survey by Financial Counselling Australia found more counsellors had positive experiences with FOS than CIO, and rated their experiences with FOS more highly than CIO.

Alexandra Kelly from the Financial Rights Legal Centre said her main concern about the move was FOS published every decision on their website while CIO published a few.

Fiona Guthrie of Financial Counselling Australia said she hoped there will be no differences in the way in which FOS and CIO determine disputes.

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www.australianmortgageloans.com

Henry Sapiecha