Buyer rescued from $3290 vacuum deal
Betty’s vacuum cleaner had a price tag of $3990, but she didn’t end up paying that price after she complained to the Insurance and Financial Services Ombudsman.
The woman, whose identity is protected, was the victim of a slick door-to-door salesman, who persuaded her the vacuum was a good deal, and even ‘‘discounted’’ the price by $700 down to $3290.
For comparison, the most expensive vacuum cleaner available at Noel Leeming, excluding robot vacuums, is the $1149 Dyson Cinetic Big Ball Animal Pro.
Betty agreed to buy the salesman’s vacuum on finance, which would have seen her pay $1476 in interest. But after making four payments of $31, she begged to be let out of the contract.
The finance company that lent her the money to buy the vacuum refused to cancel the contract and then repossessed the vacuum, which was resold for $3190.
Betty complained to the ombudsman scheme about the $1072 the finance company said she still owed it.
The scheme’s annual report, published yesterday, shows Betty’s complaint was one of 320 complaints on which the ombudsman either made a decision, or the case was withdrawn or settled. That was a record high number, up from 314 the previous year.
In all, the scheme received 3357 complaints inquiries.
Every financial services provider – be it a bank, a lender, or an insurer – must be a member of one of four approved complaints bodies. The schemes’ decisions are binding on the companies, though complainants can reject the decision and take their own action through the courts.
Betty’s case ended well. The ombudsman decided the finance company had failed in its responsible lending duties, which are designed to stop lenders from making loans likely to leave borrowers in financial hardship.
The vacuum cleaner salesman had collected her income and expenditure data to submit to the finance company. He omitted some important information that made her expenses look smaller than they were.
‘‘The case manager believed the finance company did not obtain all the relevant information about Betty’s financial situation, prior to entering into the loan,’’ the ombudsman ruled.
‘‘Betty had not listed any expenses for transport in the income and expenses form. She said she owned a house, but there were no rates payments listed.
‘‘The case manager also believed the bank statement the credit provider relied on did not provide sufficient transactions to verify Betty’s income and expenses.’’
Ombudsman Karen Stevens believed decisions on cases like Betty’s have played a part in lifting standards in financial services.
‘‘After 20 years in the role of ombudsman, I have seen a significant shift to a more customercentric industry,’’ she said.
And Stevens’ calls for law changes were being heeded.
‘‘This year, we have based our submissions on the Financial Adviser Act reform and Insurance Law reform on what we have learnt from the thousands of complaints we have dealt with.’’