This post discusses a problem which I had with a finance company back in the 1990s. It is, of course, history now, but the story is worth telling, because it exposed quite a number of problematical attitudes, behaviours and processes in the finance industry which have the potential to cause extraordinary damage to the individual customer. Most of these still exist today and support my thesis that we must find new ways of controlling the excesses arising out of these features. Also, it illustrates how loosely controlled processes within finance companies can be abused by individuals for their own ends.
The story is told in a couple of documents which I prepared years ago with a view to publishing them on the internet at the time. In the event, recovering from the consequences of the unconscionable behaviour described in it took up so much of my time (and money), I was unable to do this and I have only gone back to them now because of their relevance to the current thread.
The downturn in the economy which Australia experienced in the early 1990s was followed by a remarkable boom time. Through no fault of our own, we lost a lot of money, but we survived and would appear to have been well placed to rebuild our business and private fortunes in the improving economy. However, we had great difficulty in raising even modest amounts of finance to speed up the recovery process. At first, we simply assumed that financial institutions were averse to lending to small business in general. However, a contract to lease a new motor car in 1998 shed an entirely new light on the matter. We found that we were the victims of a highly prejudicial (and undeserved) creditworthiness report. Due to the opaque financial processes of the day (which have not changed much if the horror stories about derivative trades gone wrong are to be believed), we had no idea this report existed and only found out about it when the car dealer and its associated finance company used it to manoeuvre us into accepting a contract whose terms were totally unconscionable.
Once we became aware of the existence of the report, we set out on a long (and expensive) journey to uncover its source and how it was handled within the industry.
The first document deals with the motor car lease. The management of Volvo Australia were aware of the terms of the lease, but they endorsed it as a fair one and never retreated from that view (though after we won a court case they quietly got rid of their local managing director, the dealer and the finance company – which in itself is a commentary on their corporate ethics !). Having been a Volvo customer for 25 years, we felt very betrayed by their attitude and my essay also includes an analysis of customer relationship management in general, which some readers might find interesting.
Once the Volvo issue was settled, we continued our odyssey to expose the secretive attitudes within Esanda (whence the creditworthiness report emanated) and the deliberate or customary obfuscation displayed by other financial organisation. This part of the story is set out in the second document.
At this point, it is reasonable to ask the question “Where are we going with all this ?”. My answer is that, in a sense, people matter more than companies and other institutions. People have only one life to live and that life should not be compromised by the unethical, illegitimate (i.e. breaking rules) or illegal (i.e. breaking laws) behaviour of institutions of any sort which have been set up to provide goods and services to the community. I must stress that here I am considering only serious and lasting damage. Obviously, if one buys a new coat ostensibly with a designer label, only to find that it is a fake, the fraud is only of passing effect. To lose one’s home or one’s business at a critical time of one’s life, however, is a different thing entirely. I myself am lucky to be enjoying a pleasant enough retirement (though more limited than might otherwise have been the case), in part thanks to a beautiful and supportive family. However, when I read about those who, through no fault of their own have been driven to alcohol, drugs and suicide on account of the deceptive and fraudulent behaviour of those to whom they have entrusted their savings and assets, I have to do what little I can to change, if not the world, then at least the financial part of it.
“Where we are going” with this thread, then, is the hope that I can get to a point where I can set out my ideas (some a bit off the wall, I must admit) for the conduct and regulation of the finance industry and hopefully have some conversations with people of similar interests.