This article comes from Gary and Carroll Heathwood. NAB VICTIMS: A sequence of events which has ruined their lives. Irresponsible and predatory lending by the NAB, one most of us have been through or know so well. The NAB refused their request for an ordinary home loan and locked them into a line of credit (LOC). This had disastrous consequence over the following years. Gary and Carroll, hard working, educated business people have fought for years with NAB, the ASIC and the FOS. The years of worry and stress have taken such a toll on their health they will never recover.
Here is their horrific story.
First Dealings with the National Australia Bank 1986
Prior to 1986 ANZ was our bank but we decided to buy a supermarket in a small Western Queensland town, Augathella, in late 1986. NAB were the only bank in the town (albeit only on site from Charleville for 3 hours once a week) so we changed banks. We opened a cheque account and a savings account and obtained a $70,000 mortgage over the business. We purchased a private residence in mid-1987, purchased outright with funds obtained from sale of our previous residence in suburban Brisbane.
We purchased a second residence in Augathella in early 1990, which we intended to rent. The price was a mere $13,000 – borrowed in entirety from the NAB. It was for this latter property that we were given a FlexiPlus Mortgage and it was attached to our cheque transaction account. At this time we did not really know what a FlexiPlus Mortgage was or how it differed from a conventional mortgage. We were talked into it by the NAB manager at Charleville.
The Home loan and the business loan were all paid out but somehow the Flexi Plus Mortgage remained and was transferred to all other properties we bought even if these were our principal place of residence and this type of loan is meant for investment properties. We can only believe this was done to gain the mortgage managers bonuses and the NAB higher interest.
Everything went along smoothly and eventually we purchased another home in Chermside in 1991, a northern suburbs of Brisbane, for $92,000. The intention was to eventually return to Brisbane. Our son was working in Brisbane and Carroll had had a laminectomy after 7 years of no treatment with a smashed disc attached to and growing up her spinal cord, and we needed better access to health facilities.
In late 1994 we sold the business and moved back to Brisbane. We rented out our Augathella residence briefly before selling it. We sold the Augathella investment property in 1999 for about $30,000.
In 1995 we applied for and received Disability and Carer pensions. Carroll’s health and condition had seriously deteriorated.
In 1997 we sold the Chermside residence (for about what we paid for it). We moved to Coolum Beach and lived there between 1998 – 2003. In 2003, we bought a property at Lake Macdonald, also on the Sunshine Coast.
Attempts to Pay Out FlexiPlus Mortgage
Property transactions between 1987 and 1998 all occurred via the medium of the FlexiPlus Mortgage facility located on our operating account.
In September 1999 we bought a small electrical business for $15,000 so that we could supplement our pension/carer incomes by me working part-time.
In 1999, while residing at Coolum Beach, we wanted to finalise the FlexiPlus Mortgage and pay off our residential property. Repayment from funds obtained from property sales and payoff of debt had reduced the operating account deficit to about $2,000.
Carroll went to the NAB branch in Coolum Beach in late 1999 and asked for the paperwork and payout figure to finalise the FlexiPlus Mortgage so that we could own our home outright.
She was directed to the Mortgage Manager and, despite being in his office for about 1 1/2 hours, he flatly refused to provide the information. It was not that he talked her out of paying off the loan but rather he flatly refused her request. We found out recently that this was not a one off occurrence as my older sister had the same thing happen to her in another branch on the Sunshine Coast. However she went to Brisbane head office accompanied by her son and told the manager what had happened and paid it off there.
On the way out of the bank Carroll asked if any of the tellers could help her but they said only the manager could help. We found out belatedly in 2015 (from NAB information material) that the actions of this mortgage manager were illegal and that he was required to supply this information within 7 days at the latest.
At the time I was away on business. Carroll phoned me distressed but I could not come home right away. We did not pursue the matter further at that stage, because we thought that we had no options.
The electrical business did not go well. We had tried a few different businesses like importing LED lighting but it was at that stage a new product and the government had said that everyone in Australia must change to LED before the end of 2012 - didn't happen. In addition, I could only work up to 20 hours per week on the business because of the carer pension and my wife’s ill health.
With business losses and compound interest piling up, the cheque account deficit increased to $67,000 debit with a $70,000 limit by 2009.
We felt completely boxed in by this FlexiPlus Mortgage and no matter how hard we tried, the NAB would not let us out from under it and ruined any chance we had to go to another bank in 2009 by deceitfully and without our permission, raising the FM LOC limit instead of giving us the loan we asked for and paying the other couple's debts.
In late September 2009 we found a property in Tewantin with a house and granny flat and negotiated the price down from $340,000 to $280,000 and went to the NAB along with daughter and son-in-law to buy the property jointly. The plan was that each couple would borrow $140,000 or $155,000 if necessary.
We did NOT want another FlexiPlus Mortgage as the interest was higher than a normal mortgage and we made this very clear to the banker at the time and to FOS later on. We still had the FlexiPlus Mortgage on our home. We found out belatedly that that type of mortgage is more appropriate, if at all, for investment purposes. We had purchased and paid off many homes with the normal home mortgage loan which are paid off each month/fortnight.
We should have been able to get a normal mortgage as we were going to live in the granny flat and the other family live in the 3 bedroom house and rent the property we were living in at Lake Macdonald until it sold. A valuation put the value of our Lake Macdonald home at $550,000. This rent and subsequent sale would have made the payments on the Tewantin mortgage easily manageable and we believed we would have been able to live comfortably.
After our inquiry at NAB Noosaville branch regarding a home loan, we received an email from its lending officer Jamie Ager, 2 October am. He requested a meeting that afternoon, and to bring copious documentation.
We deferred the meeting to collect the information. It’s not clear on what day we had the meeting, but it would have been soon after.
At the meeting, we met Jamie Ager. We showed him our ATO returns for 2008-09, among other material, as requested. They indicated that we had made a net profit from the business of $2,600 each, in addition to our pensions. He read them then said put them away I don’t want to see them. He did not contact our accountant for our statement of earnings either.
Given our request, for a normal mortgage, we believed that Mr Ager had processed an application for such and we were getting it. The email from Mr Ager to us, dated 2 October, notes: “Thank you for your enquiry about a NAB home loan.”
At the meeting, we were presented with a loan application, one page of which was titled ‘Payment Instruction Schedule (to be completed by you)’. As Carroll was reading this section, Mr Ager took it from her and filled this section in himself and without a word handed the document back at the page where our signatures were required. We signed where he indicated and left the bank with nothing.
We were also advised that the then personal debts of our daughter and son-in-law were disadvantageous in terms of the prospect of them obtaining a loan for their share of the Tewantin purchase. Thus we agreed to pay the debts, on the proviso that both couples would obtain their loans. The debts totalled approximately $30,000. Surprisingly, the individual amounts paid by our daughter do not show up on our statements. The deposit on the property was somehow paid ($57,700.00) and did not show up on any statement.
We are in possession of a 4 page document signed by Phil Davis, General Manager Lending Services, Brisbane. It is dated 7 October 2009. It is titled ‘Your request to change your NAB FLEXIPLUS MORTGAGE’. It is labeled ‘Bank Copy’. The document claims that the Heathwoods would have received a personal copy of this document, but we received no such document.
This was not the document that we saw on the day of the meeting and were not permitted to read and digest thoroughly, and for which we were not provided with a copy. This document has our signatures on it, with the date 12 October. But the only occasion on which we signed a document was in our meeting with Ager.
Part 4 of this document contains the section (in capitals) ‘Payment Instruction Schedule (To be Completed by You)’. The box has a line through it and the writing (not ours): ‘N/A. drawdown + limit established only’.
It appears that both Mr Davis and Mr Ager have been involved in forcing us, by deception into a situation that we expressly went into the NAB to stop – further involvement with the FlexiPlus Mortgage facility. It was essentially an entrapment.
On 15 October 2009, $77,400 was debited to our account and the LOC limit simultaneously raised. We have never been able to find out from the bank what components lay behind this deduction. When I recently enquired what the reference numbers attached to this transaction meant, so that I could ascertain the components of the sum, I was told I would have to wait about 10 days, then more time elapsed. Then they said their records only go back 6 years and they did not know what the reference numbers meant. We have never been advised as to who the responsible party or parties were in this deduction. The NAB has consistently denied us any information on this significant withdrawal.
Our daughter and son-in-law did not get their loan despite the husband working in the mines on a good wage and being debt free. They did not get a comparable copy of our loan offer as stated by Phil Davis, Brisbane office, in the letter he sent to us dated 7 October. Their separate loan application was simply met with non-response by the bank. As a consequence we were unable to jointly acquire the Tewantin house, which was very cheap and would have resolved our financial difficulties, and help get the other family on the path to owning their own property.
We were left $153,000 in debt and at that stage with no chance of going to another bank for the loan. The $56,700.00 deposit was returned to us (that sum is also inexplicable, but it is possible that we were requested to pay a 20% deposit on the $280,000 purchase price) by the real estate company which reduced the balance of the transaction account at that stage to $98,460.
In July 2011 we moved to Katherine, Northern Territory, because we had two sons living there. There was the prospect of a better chance of more work for me. It was also highly desirable for Carroll to live in a much warmer climate as it was too cold (auto-immune problems) for her living in the hinterland on the Sunshine Coast. We had to return because of problems with a tradesperson and then stayed to finish the renovations as we wanted to add value for a better selling price. I had paid my electoral contractors licence (June 2016) in the NT to return.
We received an inheritance and on 4 August 2014 and an amount was banked $180,000 into our cheque transaction account. This was to keep the interest down, as we had always been told (the difference between the interest payable on the mortgage and the meager interest payable on a term deposit was significant), and was not used to pay down the FlexiPlus Mortgage. Our cheque account was used for everything for decades – deposits and payments, etc.
Request to the Bank Regarding Security
We wrote to the bank in October 2014 requesting some assistance with the FlexiPlus Mortgage. Nirmal Singh from NAB Resolve wrote back on 20 October 2014 saying that they had increased the facility (in October 2009) based on the information we had provided the banker (Ager), our payment history and security position. Based on this information, according to Mr Singh, NAB considers that we had the ability to service the loan at the time.
If we were not satisfied he claimed that we did have the right to contact the Financial Ombudsman Service.
On 25 November 2014 at 9.48 am I phoned the NAB info line because we had seen a story on TV of people hacking into accounts and stealing money. Due to the deposit of our inheritance and other monies, the gap between our minor debit balance and our borrowing limit was about $193,000. I was put through to a person in authority, Ms Nichole Pihon, who assured us that the money was safe and to go ahead with our renovations (on Lake Macdonald, an estimated cost of ($60 - $80,000) and leave the money in our cheque account. If the money went missing and we could show we did not take it, the NAB would replace it. We have the tape of this conversation supplied to us by the NAB upon our request.
The Financial Ombudsman Service
In February 2015 we contacted FOS and claimed that we had been given the wrong mortgage facility and had been denied the opportunity by the bank to change it. We said that we were in difficulty and asked for help.
FOS investigated and gave its Determination 23 October 2015.
The Determination: Issues and key findings
Selective quotations from the Determination:
“The FSP did not comply with its obligations as a prudent and responsible lender when it approved the LOC increase. The Applicants could not afford the LOC increase at the time it was approved.
“The applicants have incurred a loss as a result of the irresponsible lending by the FSP and should be compensated for that loss.
“The determination is substantially in favour of the applicants.”
FOS determined that it was illegitimate for the NAB to increase the line of credit from $70,000 by $140,000 to $210,000 in October 2009. That is, the bank did not consider our request for a normal home mortgage but added the line of credit to the existing unwanted Flexiplus Mortgage. The bank ignored the figures we provided, highlighting our very low income in the previous 12 months, and the prospects that our expenses in the ensuing period would exceed our income.
FOS determined that the bank could not charge interest or fees on any account deficit above $70,000. On these grounds, FOS estimated that the debt owing was $4,827, whereas the debt then showing on the bank statements was $41,782. The balance ($36,955) was to be paid to us in compensation.
We signed the Determination on 27 October 2015 and emailed it to FOS.
Within a day of receiving the signed Determination the bank reduced the facility limit of the FlexiPlus Mortgage from $210,000 to $70,000. Because the facility limit is only notified on the web version of our statements it was several days before we noticed on the internet that the amount available had been drastically reduced. The local branch of the NAB at Noosa Civic Shopping Centre could not inform us what had happened as it did not show on their computers either.
Carroll was in shock when she found the money was missing from our account and her diabetes blood sugar reading had jumped from 7.6 to 33. After over 10 years of keeping it under control it has never returned to anywhere near a reasonable reading. Even with much more medication it is still very high. The only other time was after having a knee replacement where for the 5 days in hospital she was having blood tested day and night and having insulation injected into her stomach repeatedly. Her whole health - 9 serious auto immune syndromes/diseases have developed and worsened considerably and her emotional health deteriorated. She has never recovered from the shock of her mother's 33 years of living by herself after divorce and keeping the home we helped her purchase, leaving an inheritance to partly repay us and also help her grandchildren, be taken away by the NAB. When the property was sold the NAB would have had their money in full as per the other dozen properties we had bought with normal home mortgages and sold. We never missed any payments on mortgages or other bills in our life.
The debit balance showing on the statement remained unaltered. Thus, as the facility limit was reduced, so the credit in the account was simultaneously reduced by an identical amount. The bulk ($140,000) of our inheritance money, deposited to minimise the interest bill, had been appropriated forcibly by the NAB. This action was, of course, illegal and contrary to the Terms and Conditions of the Contract.
The mortgage manager of the Noosa Civic branch rang around and was finally told that our banker was a Mr Peter Oliver and that he should know what had happened. Mr Oliver was then employed at ‘Nab resolve’ and was not a lending officer. She rang him and was told that the limit had been reduced and that he could not talk to me now but would ring the next day; also there were papers to sign. That next day never arrived despite me ringing Mr Oliver’s number which the Noosa Civic manager supplied to me and me getting in touch with her again.
We did get a letter from Mr Oliver on 9 November 2015. This letter was dated 28 October 2015 and postmarked 4 November 2015. The letter stated: “As per the outcome of the FOS determination NAB HAS reduced the limit of your Flexi Plus Mortgage to the original amount of $70,000.”
The NAB did not advise us in advance that the bank was reducing the limit to $70,000 and has never advised us that it was removing $140,000 from our account. In response to a FOS inquiry, Mr Alan Iverson, of NAB’s External Dispute Resolution section, claimed in a letter to FOS dated 20 September 2016 that we had been notified in the letter dated 28 October (the day the limit was reduced and in it's text says the limit HAS been reduced). That letter was not typed for many days until 4 November when it was posted from the head office and received by us nearly 2 weeks after it's dating, keeping us completely in the dark.
Mr Oliver sent us an email 11 November 2015, reproducing the claims made in the 28 October letter. He said that:
“NAB has credited your account with the difference of the balances as at the 31 August 2015 of $36,955.04 on the 5 November 2015. NAB has also refunded the last two months of interest charging due to the balance of the account, as per the FOS determination the balance should have been lower, this amount refunded is $476.83.”
“As NAB has been found that it should not have increased your borrowing limit, NAB has exercised its right under a credit risk decision to reduce the limit back to the original limit of $70,000.00 as it should not have approved the increase. We have now complied with the outcome of the Determination.”
The clauses he used under FOS terms of reference to justify the lowering of the limit were.
5.1(c) about the FSP assessment of the credit risk posed by a borrower or the security to be required for a loan – but this does not prevent FOS from considering a Dispute: (i) claiming maladministration in lending, loan management or security matters ... (ii) about the variation of a credit contract as a result of the Applicant being in financial hardship
At the time of the removal our account showed $56,546 dr, under the credit limit of $210,000. The bank then owed us $36,955.04 plus interest for the last 2 months ($476.83). By late November, with this FOS-ordered compensation paid, the account was less than $20,000 debit. So how were we then a credit risk? With a FlexiPlus Mortgage you don’t have to make any payments while you are under the limit.
We have never been in arrears on this account or any other in our 30 odd years with this or any bank or any other bill. The inheritance had been sitting in the cheque account for 14 months before $140,000 of it was removed with stealth by this bank in line with the equivalent limit reduction.
We are really worn out from the years of trying to sort this out and get a fair outcome. After the Determination we were so relieved as if the weight of the world had been lifted off our shoulders. Then our money went missing and we had to continue paying the NAB compounding interest on every bottle of milk and loaf of bread, petrol, etc without our inheritance money being in the account to keep the interest down as constantly being told to do by the NAB. But when the NAB knew they could no longer get interest on anything over $70,000.00 they removed our money. The limit was nearly used up from over 30 years of high compounding interest and money from a disability pension and then age pension with some paid jobs occasionally, so how could the limit be lowered?
The Elusive Oliver Email of 11 November 2015
Carroll tried to print this email from Mr Oliver but found she could not do so and closed the computer down. When she went back onto the computer she found the email had disappeared. Some days later she went to our laptop and there in our email account the email showed up. This was in the middle of the night and she did not want to wake me so she closed the computer. After a while she woke me but when we went back to the computer the email had gone again. We went to the local library and had the staff there help us. They had a great deal of trouble but finally, after printing some, doing a screen dump, they were able to print this email.
We went back a few days later and it had gone from there also – witnessed by three staff and we always regularly checked our other email accounts. Our computers had also been hacked.
Clarification of Determination
We wrote to FOS on 11 November 2015 asking for clarification of the Determination, given NAB’s behaviour. We were told that the Determination does not alter the right of NAB to vary the credit limit in accordance with the terms that apply to the account but if we believed NAB had breached these terms we could make a new complaint to FOS.
FOS told us many times per telephone conversations and in writing that they cannot tell the banks to raise or lower a LOC limit. In our view, NAB lowered the limit because it could no longer charge interest on any debit balance above $70,000.
FOS / NAB Correspondence
We have only recently (mid 2017) received copies of letters sent by FOS to Mr Peter Oliver of NAB Customer Resolve. FOS didn’t give us this correspondence, but we obtained it via the Office of the Australian Information Commissioner (OAIC).
Thus Oliver to FOS (Chat Thomas), 7 May 2015: i. In this letter to Chat Thomas of FOS, Mr Oliver claims: ‘Approval Date – Originally in 1999 ...’. This is incorrect. Rather, we have had this facility since about 1990, when we purchased the investment property at Augathella.
ii. The letter claims: ‘Last Payment - $150.00 on 24 April 2015’. Rather, this was my son in law paying money into our cheque account. This curious error highlights the indifference to accuracy on the part of the FSP.
But in particular, FOS (Andrea Barker) to Oliver, 11 June 2015: This letter states that FOS has decided that our dispute is appropriate to proceed directly to an Ombudsman’s Determination. It sets out FOS’ understanding of the dispute, issues it will consider and if there is any further information NAB needs to provide.
However, in this letter FOS displays a misunderstanding of significant aspects of the dispute.
i. FOS claimed that Financial Service Provider (FSP, i.e. the bank) convinced us to keep the Line of Credit open in late 1999, as recounted above. On the contrary. The NAB branch manager refused to give us the papers and payout figure in 1999 to finalise the LOC. This is a crucial moment in our financial history, in our entrapment in an inappropriate and costly facility, and NAB is entirely responsible for it.
ii. FOS claimed that we approached the FSP to raise the limit to $210,000 for the purchase of a property. Rather, we approached the FSP for a normal mortgage to buy a property at Tewantin and live at that property. An email from NAB’s Jamie Ager, 2 October 2009 (as below), confirms our claim:
“Thank you for your enquiry about an NAB home loan. I look forward to listening to your needs and tailoring a home loan solution to match your goals.”
iii. FOS: ‘The FSP did not require any financial information and they were on disability pensions at the time but it was approved by the FSP.’ Rather, the FSP did not want any financial information that we offered and gave it back to us. This information readily showed we could not afford an increase in the LOC on the existing FlexiPlus mortgage facility that we did not want. We could have afforded a normal home mortgage for the cheap Tewantin house if the whole deal had gone through, given our then real estate plans.
iv. FOS: ‘They have managed to pay down the loan with inheritance money. However they do not believe the increase to the facility should have been approved. Rather, the facility does not require any payment while you are under the limit. Why then would the bulk of our inheritance money of $180,000 be taken as forcibly paying down the LOC. It was in our cheque account to keep the interest down. This is what the staff and the Terms and Conditions and booklets of NAB have always told us to do. The inheritance had been in our cheque transaction account for 14 months before it was removed by the banker.
The NAB response to FOS, noted in the 11 June letter” ‘The Applicants requested the limit increase in 2009 for investment purposes. The Applicants authorised it to contact their accountant to verify their income and the system approved the application subject to verification. However it cannot locate the notes to confirm this verification. The increase was also approved based on the conduct of the account which has always been maintained under the limit.’
Rather, we sought to purchase the property for joint residency purposes, not for investment. This claim constitutes a significant misstatement. Moreover, the bank’s explanation of the approval process is disingenuous.
No verification of income details was pursued. The bank acknowledges that ‘the system approved the application’, highlighting that the approval was done automatically – an indictment in itself. However, it appears that the NAB Noosaville lending manager fed the application into ‘the system’ on a discretionary basis. Either the branch of the Brisbane office, or both, is implicated in the decision that contravened our wishes.
Bank Agreement Terms and Conditions
I refer to the NAB’s FlexiPlus Mortgage Facility Agreement Terms and Conditions. The particular copy is that of December 2003, when we were purchasing our current home at Lake Macdonald.
This horrendous agreement has a number of oppressive clauses. But, in particular, it does not claim that the bank can take your money without giving you notice (30 days).
Section 4 notes: ‘Despite 5 below the Bank may cancel the facility at any time and demand immediate payment whether or not you are in breach of this agreement’. This section has been carried over from the conventional NAB overdraft contract. It is intrinsically unconscionable, and its unconscionability has long been ignored by the regulatory authorities. In any case, in our case, they did not cancel the facility; rather the bank removed our funds.
Paragraph 11 (m) notes: ‘Imposing the reducing limit on your account ... or reducing the amortising limit period applying for a reducing limit option by giving you notice no later than 31 days before the change takes effect’. This procedure claimed was not followed. The limit (as above) was reduced overnight, following receipt of the FOS determination, and no consultation nor timely notification was forwarded to us as the contracting party.
Section 18 does say that Consumer Credit and other legislation may make sections of this agreement illegal, void or unenforceable and is to be read as if that provision were omitted. Information regarding relevant Consumer Credit Legislation and specific clauses is not provided, so the representative borrower is placed in a position of ignorance and significant disadvantage by this section.
From mid-January 2016 we contacted ASIC by phone and advised our allocated case worker Ms Sarah Brice that we believed what the bank had done by removing our money was illegal. Even if the borrower is in default and they are going to repossess your property they have to advise you in advance.
n.b. A few months after we forwarded the NAB's Terms and Conditions with scribbled notes by Carroll to do with the atrocious claims of what the NAB can do to customers, it was announced on TV that ASIC was getting the 4 big banks together to change these horrendous documents.
Ms Brice responded by letter on 22 February 2016. The salient passages of the letter are as follows:
“... ASIC will not be taking further action in relation to this matter. Based on the information you have provided, there is insufficient evidence that NAB has breached its general obligations as an Australian Financial Services Licensee.
“I note that the current NAB terms and conditions state the NAB is able to transfer money from another account, without warning if you are in arrears. I note that if an account is in arrears it is not unusual for a bank to have a clause
in the Terms and Conditions which enables the bank to transfer money form [sic] a different account. You may wish to seek independent legal advice on this issue.
“This matter was discussed with senior managers who agreed that while this puts you and your wife in a difficult position financially, there is insufficient evidence of a breach of law which ASIC administers, and as such,
ASIC is unable to investigate this matter.”
Ms Brice’s letter ‘generously’ provides the names of financial counselors in our local area and the prospect that inexpensive Legal Aid might be available to us.
Section 16 of the December 2003 facility referred to above notes the bank’s prerogative in withdrawing funds from a borrower’s account for the payment of fees, interest, or ‘the unpaid balance of that account’. However, this section clearly refers to a principal and interest facility and borrower failure to adhere to the contracted repayment terms. The Section is not applicable to our FlexiPlus facility. Our account has never exceeded the limit.
Soon after, I received a phone call from Mr Jamie Munton of ASIC, and I explained to him that we had never been in arrears in our life.
On 22 March 2016 I received a letter from Mr Munton. He claims that:
“ASIC does not intervene in personal disputes between individuals and credit providers, and as noted above we cannot re-determine FOS decisions. On the information available to ASIC, it appears that NAB has complied with the FOS determination that you received and accepted. For this reason ASIC has decided not to take further action in relation to your concerns.
While we acknowledge that this result may be disappointing for you, where a dispute with a credit licensee cannot be resolved between the parties or through FOS, the Court is still available to resolve disputes.
While we appreciate the legal costs associated with civil proceedings can be substantial, it will ultimately be a question for you to consider the potential cost and benefit ...”
I have been advised by people familiar with ASIC practices that this response is standard fare in ASIC declining to assist those who have suffered at the hands of banks. I have also been advised that Mr Munton, as per conventional ASIC responses, has denied what is in fact ASIC’s power to act in personal disputes as per s12 of the ASIC Act (unconscionable conduct of the financial service provider).
On our particular matter, Mr Munton completely misrepresented the true situation. We did not ask for any lowering of the limit. If we wanted to lower the limit all we had to do was to ring the NAB as Ms Pihon said during our phone conversation 25 November 2014 (as above). Moreover, we did not ask ASIC to ensure a re- determination by FOS, because FOS’s determination was in our favour.
Soon after I went to the ASIC offices in Brisbane (4 April) and showed the staff there (Sarah Brice and another female employee) what Mr Munton had said. They agreed that we were never in arrears, and that Mr Munton had everything wrong. Even FOS, in a telephone exchange, could see that Jamie Munton had everything wrong.
There is another curious entry in this same 22 March 2016 letter. Mr Munton claims that ‘You raised concerns that NAB has transferred $140,000 out of your offset account into your line of credit (LOC) account to reduce the balance owing and lower the limit on the LOC to $70,000.’ This claim doesn’t make sense to us. Is Mr Munton implying knowledge of an accounting process in our long term relationship with NAB of which we are completely unaware?
Contact with NAB again
At the same time, we were trying to get some satisfaction from NAB personnel. We emailed Mr Gary King at the NAB Brisbane office, and he passed the dispute on to Carol Handtke who did not reply to us but passed it on to Mr James Stafford.
Mr Stafford, at NAB head office, describes himself as NAB’s FOS liaison team manager. His email of 11 March 2016 claimed that the FOS Determination required (my emphasis) the NAB to reduce our limit to $70,000.00. Stafford claimed, ‘Accordingly, NAB reduced your limit to comply with the Determination. ... Not only was the NAB entitled to reduce our limit, it was required to do so. I apologise if this was not clear to you from the Determination.’
Mr Stafford of NAB is the one who is NOT clear. Ms Angelique Stella (Legal Counsel Financial Ombudsman Service Australia) in her letter to Simon Thompson NAB, says "In my view the Determination in case No. 390462 did not specifically deal with the issue of the FSP's entitlement to reduce the credit limit of the Flexiplus Mortgage or the breach of privacy issue".
NAB definately had no right to interfere with our cheque account to which the FM+ mortgage was attached. NAB changed our statements by adding NAB FlexiPlus Mortgage on the top right hand of our personal cheque account statements. They should of added the word attached as NAB claims it must be attached to an existing account which it was. The only other connection was the horrible monthly interest (compounding all this time). We find it hard to see any truthful statements, claims, by any NAB staff throughout our whole experience with the NAB.
In his email Stafford’s reasons for taking our money were contradictory (3 different claims) and were totally different to Peter Oliver’s excuses for taking our money.
As FOS has said many times they cannot advise the bank to raise or lower the limit and here I have a senior person in the NAB, in charge of relations with FOS, telling me that FOS required them to change the limit - 100% incorrect.
Attempts to contact NAB CEO Mr Andrew Thorburn
We contacted a Federal Parliamentarian and asked him if he would forward a letter, dated 28 April 2016, to the CEO of NAB Mr Andrew Thorburn for us so we would know he received it, which he agreed to do. We could not obtain Mr Thorburn’s address to send the letter to and we believed if we just sent it through the bank it would not be passed on. Our letter was answered (via the Parliamentarian) by a Ms Heidi McKinnis (Office of the CEO), 11 May 2016.
Ms McKinnis (11 May) noted that she understands Mr and Mrs Heathwood are disputing the withdrawal of $140,000.00 from their joint FlexiPlus Mortgage account on 28 October 2015 and gave the last four digits of the account. After completing an assessment she had found there were no Debit or Credit transactions on that date. She wanted confirmation of the date that we deposited the inheritance into the account and the date of the disputed withdrawal and again the last four digits of the account. She also wanted us to send a copy of the statement highlighting the disputed $140,000.
We wrote back 26 May 2016 saying she was right. The removal of the $140,000 did not show up on any statement and this was our cheque transaction account we have operated for 30 years to which the FlexiPlus Mortgage had been later attached. We used this account for all our transactions – business and personal.
What actually happened was that the limit was reduced from $210,000 to $70,000. But so was our gross credit balance. What we were saying was the $140,000 went missing off the face of the earth. It did not show up on any statements or at the local branch of the NAB and we had not been given any notification and we still believe they did not have any right to remove it - no 30 days notice of a change in the account as required and set out in the Terms and Conditions and elsewhere.
We supplied the date the inheritance was banked – 4 August 2014 – and most of it had been in there to keep the interest down right up to the disappearance. We can't understand why everyone eg NAB - ASIC kept referring to one of tens of thousands of deposits and withdrawals into and from our cheque account of over 30 years ($180,000.00). What was their obession with this one transaction which was actually the same as every other (thousands over decades of our daily life) and nothing to do with the FM account.
The penalty was the NAB’s, not ours but the NAB punished us.
Ms McKinnis answered, 7 June 2016, noting only detail arising from the FOS determination, detail of course with which we were already familiar. Ms McKinnis repeated the erroneous claim that NAB was compelled by the FOS determination to reduce the limit to $70,000. She makes no mention of the missing $140,000 credit. (Remember Ms Angelique Stellar's letter saying FOS did NOT and never will tell a FSP to lower or raise a limit).
At the same time, Ms McKinnis sent copies of our bank statements to the office of this Parliamentarian without our consent – supposedly to show that the NAB did not owe us anything and that the missing $140,000 did not show up anywhere. These statements did not show the removal of the money as a transaction and nothing else was presumed to be relevant. She had asked us to send her the statement but we said just look it up on the bank’s records, which she did knowing that nothing showed. The photocopies sent to the Parliamentarian acting as our go-between were a breach of our privacy. She had our email address and could have sent them to us.
We sent an email claiming that what she had done was a breach of privacy. These emails were rejected and returned to us until we said if the email is rejected again we will take it to as many branches as is necessary for it to be accepted.
Office of the Australian Information Commissioner (OAIC)
On 15 September 2016 we complained to the OAIC about the breech of privacy. They emailed NAB on 28 September requesting information.
The letter (OAIC to NAB) was supplied to us only through Right to Information (branch of the Queensland Information Commissioner) and we did not see it until this year.
Mrs Jade Haar, NAB’s Chief Privacy Officer, replied to the OAIC on 4 October 2016:
‘NAB can confirm that NAB’s Office of the CEO & Executive Leadership Team emailed two bank account statements to show that NAB did not debit funds from the account or owed funds as alleged by those parties. ...
NAB notes that via this correspondence Mr and Mrs Heathwood were seeking ‘written verification’ regarding their flexi loan account and the alleged withdrawal of $140,000 on 28/10/15.
‘Despite attempts to explain in writing to this effect further requests for verification were sought which lead NAB to proving the bank statements to provide weight to their explanation and refute the allegations made by Mr and Mrs Heathwood via their MP.’
This person’s letter has nothing to do with the truth. We did not seek written verification regarding the alleged withdrawal of the $140,000. We told the NAB about the missing money and no transaction showing anywhere.
The bank reduced the limit by $140,000 (which it acknowledged belatedly, and without consultation or advice) but also simultaneously reduced our credit by a comparable $140,000. The debit balance remained the same, so naturally nothing of the bank’s actions has shown up on the statement.
The OAIC in its reply to us said that we would reasonably expect the bank would respond appropriately in this fashion, and it mentioned Australian Privacy Principles provisions. Our answer was that the statement showed nothing of the removal of the money on 28 October 2015 and that we gave Ms McKinnis the date the inheritance was banked and she knew we had both statements. Even a child would not send something which showed nothing.
New Complaint to FOS
On 5 August 2016 we contacted FOS again about the removal of the $140,000 from our cheque account to which a FlexiPlus mortgage was attached and that the Advisor to the CEO of the NAB had copied our statements and sent them to the office of a parliamentarian without our permission.
We also noted that the NAB claimed we only had a LOC (a strategically ambiguous label which provides no substantive information as to the facility to the recipient) when all along they have said we had a cheque account with a FlexiPlus Mortgage attached to it. In the Terms and Conditions, in their Home Loans Booklets, on the internet and was acknowledged verbally from all staff for years that you cannot have a FM LOC unless it is attached to an existing account or if you don't have an account with the NAB they will open an account for you. Yet when it suits them we only had a LOC.
FOS has also succumbed to NAB misrepresentations when it claimed that we did not have a linked cheque account. FOS could have readily ascertained the truth from us.
FOS advised us that they were sending all our information to the NAB . Our reply was that is OK as long as you send everything NAB send to you to us also. This was never done but we did get a small amount belatedly through Right to Information.
FOS said they do not have the power to review NAB’s decision to reduce the limit. They have the right to assess misleading conduct. In this case, the issue then is: did the applicant suffer a loss by relying on information supplied by the FSP? FOS then asked what the applicant would have done differently. FOS is not a court of law and evidence is not under oath. We believe we gave them plenty of information and showed how we had owned and paid off 12 properties before the 1999 refusal to let us pay off the FM LOC, but have accumulated a huge debt ever since.
From Right to Information
We received further documentation of exchanges from Right to Information (part of the Queensland Information Commission).
In particular, there was an exchange between Catherine Byrne of FOS and Mr Alan Iverson, NAB External Dispute Manager. Iveson’s letter to Byrne, 20 September 2016, contains many inaccuracies.
FOS point 1 requests ‘The reasons for NAB’s position, copies of all your supporting information, and a copy of any response to Mr Heathwood. Iveson’s dot points under FOS point 1 are reproduced below, with our comments about these responses in brackets (...).
* ‘The applicant claimed he could not afford the increase.’
(No. The bank supplied the wrong loan. We, with our daughter and son-in-law, could definitely afford the normal home mortgage by living on the new property and renting this one while it was up for sale).
* ‘FOS determined that the increase should not have been provided and awarded financial compensation in the form of an interest refund.’
* ‘FOS informed NAB that interest could not be charged if the facility exceeded the limit of $70,000 ”should the FSP not vary the limit down”. Implicit in this statement is the recognition that NAB had the authority and should vary the limit down to $70,000. In saying that NAB could not charge interest if the balance exceeded $70,000 provided further incentive to reduce the limit.’
(FOS says that formally they CAN NOT and DO NOT advise a bank to lower or raise a limit. Moreover, we note that the phrase on which Iveson hangs the legitimacy of the bank’s action (‘should the FSP not vary the limit down) appears in parenthesis in the Determination and it appears to be a suggestion and is nothing to do with the Ombudsman's Determination 2 decisions/penalties against the bank.
* ‘For NAB not to reduce the limit on receipt of the Determination, effectively allowing the Applicant access to the previous balance now deemed maladministration, would have been an act of negligence and quite possibly the subject of a further FOS dispute.’
(There was $153,000 of our money in our cheque account at the time, 28 October 2015, and the NAB had to return $36,955 so in effect we were about $190,000 under the limit of $210,000. Most of this money had been in there since 4 august 2014).
* ‘The applicant deposited $180,000.00 into the account just prior to this being 04 August 2014 reducing the debit balance ...’
(We put the money into our cheque account to reduce the interest then being paid. The action of course reduced the debit balance but, as per the nature of the facility, the level of the debit balance formally remained entirely at our discretion. )
* The applicant claims that he contacted NAB on 25 November 2014 regarding his concerns about internet hacking and the security and availability of funds in his account circa $200,000. Whilst NAB has been unable to find any record of the conversation, it is entirely possible that the applicant was given reassurances that the funds were safe ...’
(I had advised FOS that I had contacted NAB on 25 November 2014 and Ms Nichole Pihon NAB had advised me my money was safe and if it went missing and we could prove it was not us who took it NAB would replace it so go ahead with your renovations). We eventually were sent a copy of the conversation with Ms Pihon.
FOS point 2 asked for ‘copies of any correspondence, including emails and systems notes, regarding deposit of $180,000 into the LOC in 2014.’
Iverson replied: ‘No relevant notes or correspondence on file.’
(This amount was banked into our cheque account to keep the interest down as we had always been told and actually had to do because of the enormous interest compounding loaded into the account of 2 people living on or below the poverty line). We had never made a payment. The only payment we tried to make was 'flatly refused' and that payment would have cancelled the FM facility and we would have owned our property and had no debt. The NAB has never asked for a payment and we wouldn't know how to make a payment.
All the transactions in our bank account to which the LOC was attached were just thousands of normal everyday transactions in our cheque account
FOS point 3: ‘Did NAB notify Mr and Mrs Heathwood that it was going to reduce the limit of the LOC before it did so ‘
Iverson ‘NAB wrote to the Applicant 28 October 2015, copy attached.’
(This should have made alarm bells ring. How could a letter written the day the money was removed inform us BEFORE the money was removed and that letter, in it's text says 'as per the outcome of the FOS Determination NAB has reduced the limit of your Flexi Plus Mortgage to the original amount of $70,000.00'. As noted, this Peter Oliver letter was dated 28 October, postmarked 4 November and we received it 9 November 2015. So the answer is of course, NO we were not informed. However FOS seems to have misread this letter. The Terms and Conditions state that to change anything other than the rate of interest the bank must give you 31 days notice. Clearly this was not done – there was no notice. Anyway the original amount was about $30,000.00 (when we wanted to pay it off and own our property - not $70,000.00).
This Peter Oliver letter dated 28/10/15 states "as per the outcome of the FOS Determination, NAB HAS reduced the limit of your Flexi Plus Mortgage to the original amount of $70,000.00". So this action was definately done without any notifcation to us, the customers.
Finally, FOS point 4: ‘Any other relevant information you would like FOS to consider in this dispute.’ Iveson responds: ‘In response to your email 19 September 2016 NAB confirms that the flexiplus mortgage is not and has never been linked to a cheque account. Internet banking transfers between accounts may be possible.’
(Terms and Conditions 3 Arrangement of facility: ‘You must select an existing account to be used as your account under this agreement, being the account to which the facility will be attached. If you don’t select an account acceptable to the bank then you authorise the bank to open an account which will be your account to which the facility limit will be attached.’ Ours was attached to the cheque account we had operated for many years.
The NAB booklets on FlexiPlus Mortgage say it is a flexible line of credit that is attached to your transaction account and is ready for you to access when you need it for your home or investment. Arrange to have your salary or other sources of income to be paid into your account to increase your balance and save interest. The NAB website said the same and all mortgage managers tell you the same. I checked on the info line about 12 months ago. The NAB employee said wait a minute then came back and said ‘you have a cheque transaction account to which a Flexi Plus Mortgage is attached‘.)
Ms Catherine Byrne of FOS contacted Mr Iveson NAB the next day, 21 September 2016, and her file note records that Mr Iveson would send through a further response to her ongoing queries. We have not been privy to any further response from Mr Iveson if it took place.
Privacy concerns: information disclosure
For our first complaint for which the Ombudsman found in our favour, we had to write to the NAB to give them permission to give FOS whatever FOS required from the bank. No more permission has ever been given to the bank to disclose any information as it was not needed. The second complaint was that the NAB removed our money. There was no reason for anyone to look at any statements of ours let alone years of statements.
What was Iveson’s agenda - what was he implying?)
94 pages of photocopies, each side of the pages of our statements were then sent to FOS dating back to January 2014. For what reason we can only speculate. However FOS asked for the first 6 months and these were not sent. Amongst these pages was an amount that totaled the deposit on the property at Tewantin and the amounts of the other couple's bills to be paid. And this was arranged by the NAB banker - no separate amounts showed anywhere - just the total. How did he manage this?
Ever since the email from Mr Peter Oliver (11 November 2015) from NAB about the reduction of our limit after the Determination our computer has been playing up. Carroll went on to the NAB website and the computer started operating by itself. The cursor ran around without anyone touching the keys and ghost programs flashed on the screen, parts of programs appeared over the icons on the desk top. She could not shut the computer down the normal way or with ctrl-alt-del and had to push the on/off button and hold it down. On the screen it said 69 programs need to close and NAB was the top one.
Another time we went onto Ten Play to enter a competition and while there Carroll saw a list saying ‘Have your say on TV’ and when she clicked on this the same thing happened as when we were on the NAB site as if someone did not want us telling our story on TV.
I showed a photo we have of this hacking to the NAB bank manager at Tewantin and he said ring the NAB and advise them as someone was hacking into our computer. I declined to follow this advice. Two days later we turned the computer on and only a black screen came up then a small white screen with a blue line running across it. This went on for 30 minutes then the computer came on and said unspecified changes to system configuration might have caused the problem. Repair action system restore. We reported our complaint to ACORN in October 2016 and spoke on the phone twice but have not heard anything back from them.
I did go back to the Tewantin branch of the NAB where I had taken the photos of the computer and asked for a copy of the Terms and Conditions and they said they did not have any at the time but to come back. I returned a week later and the manager took a phone call then came out into the foyer of the branch in front of staff and customers and was very aggressive towards us. He asked questions like where did we spend our money and why did we pay the other people’s debts. We said that the payment of the debt was not his business but that we didn’t have the money to pay their debt so the NAB did. The manager’s behaviour was quite incredible and an outright breach of our privacy.
Unconscionable Actions by NAB in brief
• 1999 - Mortgage manager at Coolum Branch of NAB for not giving Carroll the paperwork and payout figure so we could pay out the loan and own our home.
• 2009 - Mortgage manager at Noosaville Branch of NAB when he extended the LOC without any financial documents and when we only wanted a normal home mortgage loan at a reasonable interest rate. NAB made it impossible for us to go to another bank to apply for a loan for the property at Tewantin because the extra thousands to cover the bill payments for the other couple then was added to the nearly $70,000.00 debit balance and made it around $100,000.00. We believe all deliberate actions to keep us under the NAB's control leading to repossession of our property.
• 2014 - NAB resolve when they said they had done everything right, although they increased the limit on the existing LOC against our explicit opposite instructions.
• 2014 - NAB advising us our money was safe and to go ahead and renovate the house and if your money goes missing and it was not you who used it the bank would replace it. The bank said the employee believed this at the time. So are they saying NO your money is NOT safe in your NAB account?
• 2015 - NAB removing our $140,000 by lowering our FM+ limit without our knowledge or permission.
• 2016 - NAB banker for wrongly having ASIC and others believe we were in arrears and a credit risk.
• 2016 - Consultant to CEO saying we only had a line of credit when all literature including Terms and Conditions says a LOC must be attached to an existing account. Sending our statements to other people without our consent therefore breaching our privacy
• 2016 - NAB banker for hanging up on me when I asked for the meaning of the excuses he used to remove our money. He knew they were false and he could not face up to the truth. (This was a phone call I made to NAB’s info line six months after the November 2015 limit reduction and credit withdrawal. The recipient of the call put me through to the same Peter Oliver who presided over the process, and it was he who hung up on me.)
• 2016 - NAB Executive for saying the bank gave us prior notice of the lowering of the FM limit in a letter dated the day the money was removed and sent many days later and received days later again. The letter itself referred to a reduction of the limit by $140,000 but not the removal of the $140,000 credit. The NAB has never acknowledged the latter (actual money we had deposited into our cheque account).
• 2016 Same NAB Executive for sending years of our statements to FOS without our consent and to prove nothing.
FOS did a great job with our first complaint and investigated most things. There were some mistakes with their understanding of the case, as noted above.
FOS, ASIC, OAIC, or whoever, should show the details of their understanding of the case to the applicant before they send it to the bank. If this reasonable precautionary measure was followed, the applicants could answer the misinformation given by the NAB in response to the departments. Moreover, the adverse consequences for the borrower that follow from these misunderstandings could be hopefully avoided. For example, we only received the letter that FOS sent to the bank (11 June 2015) about their understanding of the case two years later through Right to Information.
All correspondence from both parties should be shown to the other party, not just a one way street as in our case where the NAB saw everything and we saw nothing. This would make both the NAB, lender and the regulatory authorities more accountable.
As FOS has noted, it cannot cross examine under oath so I believe a round table conference with the parties is necessary. In the present circumstances, the bank employees talk around the subject but do not answer directly and other times they outright lie.
How can one have a culture as in the NAB where personnel rise to the top through promotions gained by advancing the NAB’s profits at the expense of ordinary honest hard working Australians? The staff can’t be held liable for their misdeeds because they can claim that they were acting under NAB directions and thus could potentially claim significant compensation payments.
How can NAB personnel get away with saying things which are completely opposite to what their contract Terms and Conditions, all their booklets and staff say. Everyone has a different reason for their actions and none are true.
They will not tell you your money is not safe in their bank when it isn’t. Could you trust the NAB? We thought we could but we couldn’t.
Before 1999 we had bought and sold 12 properties and we were learning by our mistakes. But since being refused the right to pay off our current loan at the then trivial balance we have only gone backwards and bought nothing.
Fearing further predation by the NAB, we decided to move our account to another bank when it was possible to do so.
On Thursday 22 September 2016 we received a phone call from NAB requesting information as to why we were leaving the NAB as we were ‘valued customers’.Our Experience with the National Australia Bank. This chronology has been prepared by Gary and Carroll Heathwood over time and finalised to be sent to Bank Victims 18 March 2019