Mr G applies for a credit card
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In 1997, Mr G applied for a credit card with a limit of $1,000. Over time, Mr G’s credit limit was increased as follows:
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 | June 1999
November 1999
May 2000
November 2000
October 2001
February 2002
August 2002
June 2003
December 2003
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| $2,000
$3,000
$4,000
$5,000
$7,500
$10,000
$20,000
$30,000
$34,000
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Some increases were as a result of formal applications made by Mr G and others were “unsolicited offers” made by the bank and accepted by Mr G.
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Applications by Mr G for credit limit increases
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In the case of the applications made by Mr G, the application forms showed that he sometimes claimed to have a large superannuation entitlement and/or investments. However, the income that he disclosed was in line with the current Disability Pension. He stated in applications that he owned his house.
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Mr G falls behind in his payments
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In the case of the applications made by Mr G, the application forms showed that he sometimes claimed to have a large superannuation entitlement and/or investments. However, the income that he disclosed was in line with the current Disability Pension. He stated in applications that he owned his house.
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Mr G falls behind in his payments
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Mr G fell into difficulty servicing his account, which exceeded its credit limit. The bank made a demand for $42,000 owing on the account and commenced legal proceedings.
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Dispute lodged with BFSO
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The administrator of the fund raised a dispute with BFSO and the bank consented to it being considered by the Ombudsman and discontinued the legal proceedings.
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The dispute
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Mr G’s representative argued that Mr G had suffered a serious head injury at the time of the accident and could not manage the credit that he had been given. A claim was made that the bank had acted unconscionably in providing the credit to Mr G. The administrator said that the funds held for Mr G were to be used for him to live independently for the remainder of his life and were not intended to be used to pay out an account such as the one in dispute.
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The bank’s view
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The bank argued that Mr G, though physically disabled, was able to manage a credit card account and to request and accept credit limit increases. It said that he had sufficient funds in the account administered by the administrator to repay the debt in full.
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Settlement
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After the case was placed into investigation, the parties negotiated a settlement, by which the bank accepted a payment of $5,000 in full and final satisfaction of the credit card debt.
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