Contact us

0800 347 257

When the financial service provider does the right thing

Sarah was in an abusive relationship when her partner applied for a personal loan, and she was added to the loan as a co-borrower.

Later Sarah left her partner to start her new life, she lost her job and was left to pay the outstanding loan debt of $7,000. The debt collector said that they were struggling to get hold of Sarah’s ex-partner and had no other option than to ask Sarah to pay the debt.

Sarah explained that she was unable to pay the debt and asked the lender to consider reducing the balance.

Dispute

The lender agreed to reduce the debt from $7,000 to $1,000 on the condition that Sarah pay $1,000 within the next week. Sarah said that she was unemployed and did not have $1,000 to pay the debt and complained to FSCL.

Review

By the time we started our investigation, Sarah had found a job, but was still unable to make a one-off payment of $1,000. Our case manager realised that Sarah was a vulnerable consumer and worked with her and her financial mentor, who said that Sarah would be able to afford a weekly repayment of $20.

We discussed Sarah’s financial position with the lender and highlighted that Sarah was a vulnerable consumer who was working her way back to a stable life. We told the lender that Sarah knew that she was responsible for the debt and wanted to repay the debt, but that her financial situation limited here affordability.

Resolution

Acknowledging that Sarah was a vulnerable borrower, and her current financial circumstances were difficult, the lender agreed to freeze the remaining balance at $1,000 and to accept weekly repayments of $20.

Sarah was relieved and thankful for the assistance.

Insights for participants or consumers and participants

Although the lender could have pursued Sarah for full repayment, it was good that the lender decided to do the right thing and put the borrower’s needs first. We don’t consider that cases like these set a precedent but rather set a good example of doing the right thing.