Student loan issue
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Mr N enrolled in an educational course with a course provider and at the same time applied for and obtained a student loan from the bank through the course provider, as part of the enrolment process.
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Information about the loan was included in the tuition information and was described as a student loan scheme established by the course provider in conjunction with the bank. The loan was co-branded by the bank and the course provider.
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The course provider goes into liquidation
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The course provider went into liquidation part way through Mr N’s course and he received none of the certificates associated with the course. He was advised by the liquidator that there would be no payment out of the liquidation to him.
In addition, the Australian Council for Private Education and Training advised that because the particular course was not an accredited training course it was not covered by the Australian Student Tuition Assistance Scheme, despite written representations by the course provider in the tuition information that it was a member of the scheme and that the scheme protected the fees of students. The bank held Mr N liable for repayment of the full amount of the loan.
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The dispute
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Mr N’s dispute was brought to BFSO by a community legal service acting on his behalf, which argued that Mr N should not be liable to repay the loan. It argued that the bank was a linked credit provider within the terms of the Uniform Consumer Credit Code (UCCC), that there had been misrepresentations made to Mr N which were not correct, that Mr N was entitled to rescind the tuition contract and under section 125 of the UCCC, was entitled to terminate the loan contract.
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Resolution
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The bank did not admit that it was a linked credit provider but the dispute was nevertheless resolved after the second referral to the bank when agreement was reached that Mr N and his parents, who were guarantors to the loan, would be fully released from liability.
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