FINDING 1A * Overcharging of discharge fee members sought reimbursement and compensation for additional costs incurred

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1 Credit Union Dispute Resolution Centre FINDING 1A * DATE: 4 October 2004 SUBJECT MATTER: Overcharging of discharge fee members sought reimbursement and compensation for additional costs incurred SEE ALSO: Determination 1B The following is the finding I have reached in the case of Mr & Mrs D ( the members ) and the credit union. Investigation I have reviewed: 1. All of the information provided by the members and the credit union; 2. The advice of the Dispute Manager s legal adviser regarding the legal issues raised by the case; and 3. The circumstances of the case with an overall regard to fairness. Background Information 1. The members sold their suburban property [property 1] and [a conveyance firm] was acting for them in that transaction; 2. The credit union advised the members that the discharge fee was $150.00; 3. Following settlement, the members found out that the credit union s solicitor collected $ discharge fee; 4. The members said that they contacted the credit union several times to try to have their complaint resolved over the telephone without success; * This Finding has been edited for external publication and the parties de-identified.

2 5. On 17 November 2003, the members spoke to a Senior Loans Officer and subsequently sent a facsimile to the credit union providing evidence that they had been over-charged; 6. When the members did not receive any response from the credit union, they contacted the credit union several times to follow up the matter between November 2003 and March The members said that each time they asked to speak to the Senior Loans Officer who was dealing with their complaint. Instead of transferring their calls, the credit union call centre staff insisted on asking for more information regarding the purpose of their calls; 7. On 15 March 2004, the members travelled from their home in rural Victoria [property 2] and delivered a complaint letter to the credit union s head office; and 8. After receiving the credit union s response to their complaint, the members also travelled to their solicitor s office to discuss the matter. The Dispute Resolution sought by the members: The members believe that the credit union should reimburse them the amount of overcharged fee, the interest that they have lost on this amount, their travelling and meal expenses for the trips they made to the credit union s head office and to their solicitor s office. Credit union response The increased settlement fee required by the credit union s solicitor is considered reasonable due to the change of settlement venue. The credit union does not consider the members claim for reimbursement of travelling and meal expenses reasonable. As a good will gesture, the credit union offers to refund the $55.00 extra fee charged plus interest as full and final resolution of the members dispute. Documents The documents that I have reviewed are listed in Appendix I.

3 Questions The questions raised by this case include: 1. Is the credit union entitled to charge the increased discharge fee? 2. In the context of resolving the dispute, is it reasonable for the expenses of which the members are seeking reimbursement to have incurred? 3. Was the inconvenience experienced by the members beyond what could be regarded as reasonable? Assessment Is the credit union entitled to charge the increased discharge fee? The members solicitor arranged simultaneous settlements for the sale of [property 1] and the purchase of [property 2] to take place on 22 October 2003 at [a CBD location]. They believed that a representative of the credit union s solicitor was also attending an unrelated settlement in that location at the relevant time. The credit union s solicitor has advised that the usual place for them to effect discharge settlements is at their office. Because the members solicitor had requested the settlement to take place at a location other than their office, an increased discharge fee of $ was charged. They advised the members solicitor about this fee on 14 October 2003 as well as providing a tax invoice at settlement. It may seem unusual for the credit union s solicitor to charge an increased fee to conduct settlement at a CBD location that is commonly used for that purpose. This is more so when they already had a representative attending another settlement at the location where the subject settlement was to take place. The credit union had previously advised the members that the discharge fee would only be $ There was no indication that an increased fee would apply for settlements conducted at locations other than its solicitor s office. My view is the credit union should only charge the members $

4 As the credit union has agreed to refund the extra fee plus interest, I consider that the issue of the disputed fee has been adequately resolved. In the context of resolving the dispute, is it reasonable for the expenses of which the members are seeking reimbursement to have incurred? In their letter of complaint delivered to the credit union, the members sought reimbursement of $ comprising the $55.00 over-charged discharge fee, lost interest $1.06, travelling expenses $ ( cents/km) plus meals expenses of $ When lodging their formal dispute with this office, the members claimed a further sum of $ comprising travel and meal expenses to visit their solicitor s office on 5 May When members deal with their credit unions to resolve disputes, the Dispute Manager expects that the members will: Bear the ordinary and normal degree of inconvenience associated with correcting an unexpected problem; Take reasonable steps to minimise the inconvenience suffered; and Be moderately robust in the way they dealt with a problem. In this case, the members said that their repeated attempts to resolve the issue with the credit union over the telephone and by facsimile were unsuccessful. This lead to their decision to embark on the 309 kilometre journey to personally deliver the complaint letter to the credit union s head office. According to their correspondence and my telephone conversation with Mr D, on 2 August 2004, Mr D said that when he asked to speak to the Senior Loans Officer, the call centre staff always insisted on asking for more details of his telephone enquiries. He told the call centre staff that the issues had been escalated to higher level and declined to elaborate further. If the credit union has decided that the call centre staff should obtain more information from callers before connecting them to the appropriate staff member, then it is a policy decision which CUDRC can not review, provided that the policy is in accordance with good industry practice in relation to resolving disputes.

5 Whilst I understand the members frustration at not being able to resolve the dispute with the credit union initially, I believe that there were more reasonable alternatives such as posting their complaint letter by registered mail. My view is that the travelling and meals expenses were not unavoidable. I am not satisfied that the action by the members in taking the long journey to deliver the complaint letter to the credit union was consistent with making a reasonable effort in order to minimise their inconvenience. I do not consider that the credit union should be required to reimburse these expenses to the members. Was the inconvenience experienced by the members beyond what could be regarded as reasonable? The members have provided this office itemised telephone call statements showing that they made the following calls to the credit union s [call centre] number: Date Time 27/10/03 12:05 pm 29/10/03 04:38 pm 03/11/03 04:03 pm 06/11/03 12:12 pm 12/11/03 10:03 am 17/11/03 11:01 am 21/11/03 11:11 am 04/12/03 10:08 am 11/12/03 09:57 am 23/02/04 09:07 am 01/03/04 09:04 am 10/03/04 10:38 am 24/03/04 02:43 pm The itemised telephone call statements do not by themselves show that the members were contacting the credit union regarding this dispute. However, together with other information provided, I am satisfied that the members made several telephone calls to the credit union about the dispute before and after 17 November When Mr D raised the dispute with the Senior Loans Officer of the credit union on 17 November 2003, he was asked to produce documentary evidence of the increased fee charged. In response, Mr

6 D provided the credit union with copy of the following documents by facsimile: 1. Statement of Funds for the sale of [property 1] showing $ was paid to the credit union solicitor; and 2. Letter from the credit union dated 30 June 2003 stating that the Discharge Fee would be $ The members have also provided a copy of the Transmission Verification Report in support of their facsimile transmission. The credit union could not locate the transmitted information and does not have any record of receiving it. I have verified the facsimile number used by the members in fact belonged to the credit union. One of the itemised telephone call statements recorded a STD call made to [the credit union] on 17 November 2003 at 3:35 pm. This information corresponds with details on the Transmission Verification Report of the facsimile. The weight of information supports a conclusion that the members have provided the credit union with the information it requested to resolve the dispute on 17 November As stated, this office expects that members would bear an ordinary degree of inconvenience in resolving disputes with their credit union. In cases where members have suffered more than a reasonable degree of inconvenience, this office will assess whether their credit union should be required to make an appropriate compensation payment. In this case, my view is that it is reasonable for the members to have to contact the credit union a number of times regarding their dispute about the over-charged fee. However, I consider that the credit union was in a position to resolve the dispute on and shortly after 17 November Even if the credit union could not locate the facsimile, it had an opportunity to address the members concerns by referring to its own records such as the copy of the letter it sent to the members dated 30 June 2003, its prevailing fees and charges schedule and by checking with its solicitor. By not being able to resolve the dispute on or soon after 17 November 2003, the members had to spend additional time and efforts in the following few months which I consider as unnecessary.

7 In the circumstances, my view is that the time and efforts spent by the members after 17 November 2003 can be regarded as beyond the ordinary degree of inconvenience reasonably expected to be experienced by the members. My assessment is that the credit union should make a payment of $ to the members in compensation for the unnecessary inconvenience that they have experienced. Finding In my view: 1. The travelling and meals expenses claimed by the members are unreasonable in the circumstances; 2. The credit union should refund the members $55.00 plus interest for the over-charged fee; and 3. The credit union should pay an additional $ to compensate the members.

8 Appendix I List of Documents Reviewed 1. Copy of Statement of Funds for the Sale of [property 1]; 2. Copy of Transmission Verification report printed at 15:35 on 17 November 2003; 3. Copy of [name of phone company] Statement of Call Details for account number [xxx] issued on the following dates: 13 November 2003 (4 pages) 13 December 2003 (4 pages) 13 January 2004 (1 page) 13 March 2004 (1 page) 13 April 2004 (2 pages) 4. Copy of facsimile from [the member s conveyance firm] to the members dated 4 August 2004; 5. Copy of letter from [the credit union s] lawyers to [the member s conveyance firm] dated 14 October 2003; 6. Copy of Tax Invoice issued by [the credit union s lawyers] dated 22 October 2003; 7. Copy of letter from [the credit union s lawyers] to the credit union dated 17 August 2004; 8. Copy of credit union s file notes from 15 March 2004 to 10 May 2004 in reference to the members dispute; 9. The credit union s schedule of fees and charges as at 27 March 2004; 10. Copy of Offer and Loan Contract dated [xxx] between the credit union and the members; 11. Copy of the credit union s offer of further credit under existing loan contract made to the members on [xxx]; and 12. Various items of correspondence between the members, the credit union and this office.