 ASIC sues General Commercial (Urban Commercial) and Eden Capital (Southside Lending) for failure to cooperate with AFCA As advocates for consumers in the financial space, SR Group welcome action that illustrates consumers are fairly supported if and when they have the need to lodge a dispute through AFCA.
SR Group are pleased to see that ASIC is serious about taking action against firms that do not comply with AFCA, thereby promoting the reliability and fundamental principles of the AFCA scheme itself  The ATO appears to have changed it’s tune of late with a pause on firmer tax debt collection activity in the regions hit by lockdowns including Sydney, Melbourne and the ACT.
 We understand the experience of being forced into bankruptcy is highly stressful for individuals. The process can involve court proceedings, substantial costs, the need for legal advice and very often - fear of losing the family home. With an individual able to be bankrupted on a debt as little as $10,000, the final overall amount can balloon quickly after legal costs and fees are added.
 In 2019, the Federal Government committed to establishing a Compensation Scheme of Last Resort (CSLR), a key recommendation of the Banking Royal Commission. The CSLR was meant to provide a safety net to financial misconduct victims and ensure that determinations for compensation to consumers would be honoured, however, the CSLR that the Government has proposed does not provide the consumer protections that the industry so desperately needs.
 The SR Group have a long and successful history settling client’s debts at significantly reduced amounts. Our experienced team are excellent at negotiating a discounted lump sum settlement with the client’s creditors reducing the LVR to allow their broker to refinance their existing mortgage.
 On 13 August 2021, the SR Group prepared and lodged a submission to the Treasury consultation
process on the draft legislation for the Compensation Scheme of Last Resort (CSLR). The CSLR exists to provide funding to consumers who receive compensation orders through the Australian Financial Complaints Authority and do not received the money they are owed. Our client was recommended a strategy by her financial advisor to refinance her home and obtain additional funds to invest for the future. The financial firm issued our client with new loans comprising a home loan and multiple investment loans. Our client alleged that the loan repayments were beyond her means and that the financial firm did not fulfil its obligations when assessing the borrower’s ability to service the loans.
Actions Taken to Assist & Result Achieved We investigated the loans' serviceability and found our client had not been able to service the loans on her income capacity. We compiled a detailed submission to AFCA in regard to these claims. AFCA reviewed the submission and decided the financial firm were required to pay compensation for the interest accumulated on the home loan since 2008—resulting in a fair and successful outcome for our client. With 2020 behind us, many businesses are now in recovery mode. This year will be one of budget repair for most businesses through developing long term strategies. Here are some issues all small to medium businesses should consider to ensure their survival.
1. Build client or customer relationships A priority as once COVID-19 hit how many businesses have had the time to do this proactively? Cost-cutting, streamlining operations, implementing new health and safety procedures were the focus. It is now time to revisit customer relationships and how to support them for mutual benefit. If your customer base has changed, focus on building new relationships to deliver repeat business in the future. Ask yourself what the real value of each customer and the cost to you is to get them. New customers generally cost more to acquire than maintaining existing ones. However, this is sometimes not the case. You may spend more time and money serving low-value clients, and those precious resources would be better spent forming new relationships. Our client came to us after losing her home and personal belongings in a fire. She held a building and contents insurance policy that was paid up to date at the time of the fire. Our client claimed fire damage to the property. The claim was referred to the insurer's investigation department for assessment. After the evaluation of the property, the insurer decided our client had not disclosed the condition of the property when taking out her policy.
The insurer declined the claim based on our client's nondisclosure. The insurer also cancelled the policy stating if our client had disclosed the relevant information would not be a risk. Actions Taken to Assist & Result Achieved Our team firstly evaluated the case and found the insurer did not provide a detailed and thorough process when our client applied for insurance initially. We put forth a comprehensive submission to AFCA. We argued the unsubstantiated refusal of the claim and our clients' loss. The insurer was directed to settle our client's claim for the contents and the house to be rebuilt. The insurer's cancellation of the policy based on nondisclosure was deemed incorrect and the policy reinstated. We have seen a significant number of family-run businesses breakdown due to financial distress in the last twelve months. By the time a business is in financial distress, strained family relationships are often compounded further with money worries. If you're setting out to establish a business with family members, it is vital to recognise the inherent risks.
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