Franz purchased a phone from a finance company selling goods door to door. Franz agreed to pay $1,400 in $20 weekly payments. The sales agreement allowed the finance company to charge Franz:
- a $50 establishment fee
- a $5 monthly administration fee
- default fees and charges, not specified
- a $15 missed payment fee.
Franz started repaying the $1,400 and after making four payments received the phone. However, Franz lost his job, and was having difficulty paying $20 a week. Franz went to a budget adviser, Marie, who negotiated with the finance company to reduce the payments to $10 a week.
The finance company reduced Franz’ direct debit to $10. However, the finance company accidentally loaded another direct debit for $10, the day before Franz was paid. Franz’ financial situation worsened and he went back to Marie.
Marie reviewed Franz’ original contract and his account statements and noticed that as well as the duplicated payment the finance company had incorrectly recorded Franz’ initial loan as $1,600 and was deducting $10 a month for its administration fee. Marie contacted the finance company but the finance company did not accept there was a problem. When the finance company stopped responding to Marie’s telephone calls and emails, she called FSCL.
Franz’ view
Franz agreed he had missed some payments, and the finance company was entitled to charge him missed payment fees and interest. However, with Marie’s help Franz queried:
- the opening balance of $1,600, it should have been $1,400
- the $10 monthly administration fee, it should have been $5
- the duplicated $10 payment had caused the account to be charged a number of $15 missed payment fees, Franz wanted all the missed payment fees refunded
- the duplicated $10 payment had been dishonoured by his bank causing him to incur $15 dishonour fees and $10 out of order fees.
Franz also said the duplicated payments had caused him a lot of stress and financial worry.
Review
Because Marie had been waiting for the finance company to respond to her for a couple of months we began our investigation. We asked the finance company to respond to Franz’ queries.
Outcome
After some negotiation, the finance company agreed:
- the opening balance should have been $1,400, and could not explain how the error occurred
- although it had written to all customers advising the monthly administration fee had increased from $5 to $10, the finance company offered to refund the additional $5 charged
- the duplicated payment was a staff error
- to refund all fees associated with the error, both those charged by the finance company and the bank
- Franz had suffered stress and inconvenience, offering $100 to resolve his complaint.
In total the finance company reduced Franz’ loan balance by $570. Franz was very happy with the outcome.
Our insight
Once the complaint reached us we were able to help the finance company and Franz resolve the complaint. However, the complaint should never have reached us in the first place. If the finance company had responded to Marie’s queries it should have been able to identify its errors and make the appropriate adjustments.
