Under duress

Mary and James applied for finance to buy a van. They approached a broker who suggested they apply for finance under Mary’s name only as James had a bad credit history. The broker assisted Mary and James in submitting their application to the lender.

The loan application was approved in Mary’s name and Mary and James took possession of the van.

Soon after, Mary contacted the finance company saying she did not want the van and complained that her loan application should never have been approved. Mary explained that she had bought the van under duress from her partner James, who she had only lived with for one month. She was counting on the broker to see she was under duress, and for the loan application to be declined.

Upon the relationship ending, Mary made a police complaint about James’ subsequent threatening behaviour.

The broker said that while they were sorry to hear of Mary’s circumstances, they did not believe Mary was showing any signs of duress, but rather, her decision to unwind the loan came as a result of the relationship breakdown. They assisted Mary with cancelling her mechanical insurance purchased with the van. However, the broker noted their role was simply to help Mary find finance with a lender. Mary would need to contact the car dealer herself to return the van. To make matters more complicated, the broker Mary had dealt with was no longer contracting for the finance company.

Mary did not want to be stuck with a loan contract for a van she did not want and had felt under duress to purchase. Mary felt that the broker owed her a duty of care to ensure she was not signing the loan application out of duress. She further alleged that the loan should not have been approved as she was a single mother receiving a benefit. She believed that the only reason it was approved was because the broker acted unethically and provided false information to the lender about her finances, so as to earn commission. Mary wanted to return the van and be released from the loan agreement. Mary complained to FSCL.



We explained to Mary that the primary responsibility for being satisfied she could afford to repay the loan lay with the lender. With Mary’s consent, we contacted the lender and referred Mary’s complaint to it. We asked the lender to consider whether they had fulfilled their obligations under the responsible lending code. It appeared that while the lender had sought evidence of Mary’s income, it may not have sought sufficient evidence of her outgoings.



Mary found a buyer for the van but she was left with some of the loan to repay. We assisted Mary with negotiating a settlement with the lender.

Mary, while relieved to be released from the loan contract, wanted to pursue her complaint against the broker. This is because she felt the broker had acted unethically by providing false information to the lender about her finances, and breached his duty of care to her by not checking if she was under duress.

The broker provided evidence from another car yard suggesting Mary did not appear to be under duress on the day she purchased the van. We agreed there was no evidence to suggest Mary was displaying signs of duress such that should have put the broker on notice. Similarly, it would be difficult to prove the loan application had been falsified. Further, ultimately it was the lender’s responsibility to ensure that the lending was done correctly. Mary had settled with the lender on this.

We suggested that the broker offer Mary $500 for the stress and inconvenience. We told Mary we considered the broker had made a reasonable settlement offer.

Mary accepted the broker’s settlement offer.


Key insights for the participant and the complainant

It is the lender’s responsibility to ensure that it obtains sufficient evidence of an applicant’s income and liabilities to ensure they can afford a loan. The lender should not rely solely on information given to them by a broker.