Suncorp forced widow to repay loans quickly

It was reasonable to expect a widow who was not working to repay $220,000 in six months, the royal commission has heard.

Suncorp executive David Carter leaves the royal commission in Melbourne yesterday. Picture: AAP

It was reasonable to expect a widow who was not working to repay $220,000 in only six months, even though the loan should never have been made in the first place, Suncorp’s chief executive of banking, David Carter, has told the financial services royal commission.

Bankers also treated the widow’s son, Rien Low, with suspicion when he approached the bank to resolve the issue following the death of his father, with one asking “WTF” he was up to, internal Suncorp documents shown to the commission reveal.

And Mr Carter also revealed a letter from him that gave the family false hope that Suncorp would reduce crippling repayments was nothing more than a form letter generated by the company’s automated systems.

Separately, the Brisbane-based bancassurance business has also told the commission that its life insurance arm has a “systemic issue in relation to delayed resolution of internal dispute resolution processes, responses to FOS (Financial Ombudsman Service), and compliance with FOS determinations”.

This round of hearings has raised questions over responsibility in small business lending, including who was at fault when a bank lent to an inexperienced small business operator who saw their venture fail and then lost the house they had provided as ­security.

Bank bonuses also came under scrutiny, with some witnesses admitting staff were still paid substantially or entirely based on how many products they sold.

Mr Carter defended most of the bank’s treatment of the Lows during vigorous cross-examination from counsel assisting the commission, Rowena Orr, QC, and in front of Mr Low, who had just given emotional evidence about the toll the ordeal had taken on a family already wracked with grief over the death of his father, Peter.

He blamed Peter Low for the saga, saying Suncorp was “were misled and deceived as to the purpose (of the loan) by the ­borrower”. “This is something that we have found ourselves in as a result of the misdeeds of others,” he said.

Mr Low, a TV producer and former member of boyband Mercury 4, said the family had an “extremely stressful” and “very frustrating” time dealing with Suncorp after discovering debts of almost $1 million to the bank following his father’s death in November 2015.

Applying for help from Suncorp under hardship rules, widow Jennifer Low said that after loan repayments of $4795 a month she had a shortfall of $2894 a month in her budget.

After FOS found that the last of five loans to the father’s small business should never have been made, the bank made a series of offers to set up repayment plans.

Mrs Low asked for a year’s reprieve but Suncorp offered only four months, so she pushed ahead with the sale of her family home in the hopes of repaying four of the five loans.

The bank wrote to Mrs Low requiring repayment of the $221,000 owing on the final loan in six months.

Mr Carter defended Suncorp’s demand, even though it appears to contradict FOS’s determination that no interest should be charged on the loan in the future.

“Our understanding of what is acceptable practice is six to 12 months would be acceptable practice,” he said.

He could not point to any documents that let Suncorp insist on early repayment.

“I want to put to you that applicants may not proceed with applications to FOS if they realise that this is what success looks like,” Ms Orr said.

“I accept that,” Mr Carter said.

Next week FOS’s Philip Field will give evidence and is expected to face questions about how the bank should have treated the loan in light of the ombudsman’s ­ruling.

In August last year the Lows had their hopes raised by a letter signed from Mr Carter apparently lowering the repayment amount.

But the form letter had been sent automatically because the family reduced the loan balance by selling a property.

Suncorp’s executives “did not see that someone would see this as being an offer to extend,” Mr Carter told the commission.

“It did not enter the mind of people at the time.”

Suncorp staff expressed mistrust of Mr Low as they discussed the case in July last year. “I need to discuss with you, please,” senior risk manager Ian Goldspring said to a colleague — who cannot be named — in an online chat session. “WTF is this son up to?”

Mr Goldspring told another colleague it “sounds like he is up to something”, the commission heard. Mr Carter said Mr Goldspring’s language was “inappropriate”. But he said he was “not prepared to fully agree” that the sentiment behind Mr Goldspring’s words was also inappropriate. “This relates to something to do with the media,” he said, without explaining what.

The impact of the bank’s treatment had been “less than desirable” but “the intention behind what we did was fair”, he said.