State Admits Excess Charges
Sydney Morning Herald
Tuesday June 25, 1991
State Bank of NSW admitted yesterday it had overcharged some customers for stamp duty on personal loans.
The bank also conceded in a Commercial Tribunal hearing its breaches of consumer credit legislation relating to these and other matters might affect 350,000 loans.
The tribunal is investigating flawed personal loan contracts written by the bank between 1985 and 1990 that breach a number of sections of the NSW Credit Act.
State Bank is attempting to have credit charges on the loans reinstated by the tribunal, arguing the flaws were minor.
But a number of new breaches were revealed yesterday.
Counsel for State Bank, Mr Robert Macdougall, QC, indicated the bank was likely to make application regarding yet further offences it had committed in its personal loan documentation.
The breaches admitted to yesterday include charging certain borrowers excessive amounts for stamp duty on consumer credit insurance and charging of excess fees for informal telephone calls made when checking loan applications with the Registry of Encumbered Vehicles.
Various borrowers claim to have been materially disadvantaged by the breaches and are taking action to prevent the bank from having its credit charges reinstated through the Consumer Credit Legal Centre and the Redfern Legal Centre.
Counsel representing the borrowers, Mr John Basten, told the tribunal yesterday that State Bank had also committed breaches by illegally charging stamp duty on unsecured personal loans, though he said it "is not clear whether it was State revenues or the bank itself that benefited".
The Redfern Legal Centre argues the total amount affected by the loan breaches, which State Bank theoretically stands to lose all of under section 42 of the Credit Act if its application to the Commercial Tribunal fails, is more than $1 billion.
Lawyers from the centre said outside the hearing State Bank's breaches individually were not overwhelming, but the growing number of areas of the Act it had flouted undermined the bank's claim that its errors were "minor".
The bank's additional applications are believed to relate partly to a computer error that led to a large number of its personal loan clients being double-charged interest in 1989. The bank claims it has since resolved the matter and repaid the excess payments.
Yesterday's argument also concerned the best means of surveying State Bank's personal loans to determine exactly what the mistakes in documentation were.
Mr Macdougall said the bank would examine a sample of 1,500 or so of the affected loans in the next three weeks, if that was satisfactory to the tribunal, but Mr Basten called for an outside auditor such as Touche Ross or Peat Marwick to be brought in to prevent any conflict of interest.
The hearing will reconvene on July 19.
© 1991 Sydney Morning Herald
Share This