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Case studies


This is a collection of case studies that have appeared elsewhere in this edition of The Circular. It includes: Giving consideration where all information is not available, Home loan, When financial difficulty cannot be overcome, and more.

Giving consideration where all information is not available

Mark requested assistance as a result of a change to his financial circumstances which prevented him from meeting the required repayments to a credit card. The FSP sought additional information from Mark to identify a reasonable repayment proposal.

Mark did not provide the requested information or assist the FSP to identify a reasonable repayment proposal; instead he lodged a dispute with FOS. In responding to the dispute, despite the absence of the information requested from Mark or a repayment proposal, the FSP considered the information that it already held.

Based on a review of account statements, the FSP identified a repayment amount that it considered Mark could maintain, and wrote to him offering to accept repayments at the revised amount to enable the debt to be repaid. In its letter the FSP also identified the reasons why it considered it was a reasonable proposal.

FOS found that the FSP had met its obligations in the circumstances as it was willing to consider Mark’s financial difficulty and propose repayment variations to assist him to overcome his financial difficulty, even when he had not provided the information requested or a realistic repayment proposal.

Home loan

Sarah had fallen into arrears with her home loan due to a failed business. Sarah’s income was no longer enough to service the loan by herself. Her husband was also earning an income; however, he was not a party to the loan and he was bankrupt. The couple had been meeting repayments from their combined income for five months. The FSP was reluctant to take into account the husband’s income because he was not a party to the loan.

A telephone conciliation conference was held and during the discussion the FSP reassessed its position and identified that if the contract was varied the couple could repay the loan. The parties agreed that the couple would continue to make repayments for a further three months to demonstrate serviceability. At the end of that time, the FSP agreed to adjust the loan so that it was no longer in arrears.

When financial difficulty cannot be overcome

Max and Susan, who were farmers, brought a complaint to us. Their farm had been affected by drought and the loan secured over the farm property had fallen into arrears of $100,000. Over a number of years the FSP tried to assist them with various repayment arrangements, but they were unable to return to making full repayments.

A telephone conciliation conference was conducted by FOS and the couple acknowledged that the only option was for the farm property to be sold. The parties agreed that Max and Susan would have an extended period of time to sell, because this would allow them to complete the next harvest and use this income to reduce their debt, and would also ensure that the farm remained operational through the marketing campaign.

A consumer should pay what they can while their proposal is being considered

Nick requested assistance when he was unable to make full repayments on his car loan, which had three years remaining. He provided the FSP with a Statement of Financial Position (SOFP) that showed that he could afford repayments of $120 per month if the loan term was extended by a further year.

The FSP declined to vary the loan term and sought additional information from the consumer, including a statement from his non-English speaking partner regarding the payment of household expenses. 

Nick lodged a dispute with FOS. FOS contacted the FSP and noted that the proposal put forward appeared to be reasonable based on the information held by the FSP. This was because the SOFP showed that:

  • Nick could afford repayments of $120 per month
  • he had been making repayments of this amount for several months, and
  • the extension of the loan term by one year would see the remaining debt repaid.

FOS considered that Nick had demonstrated an ability to repay the debt if the contract was varied. Therefore, it was appropriate for the Ombudsman to exercise his power to vary the regulated credit contract if a resolution was not reached between parties.  The FSP reconsidered its position and accepted Nick’s proposal without the need for further information. The resolution was formalised in a settlement agreement.

Repeat requests for assistance

A dispute was brought to us by a husband and wife – Jim and Angela – who held an investment loan with the FSP. Jim suffered a heart attack and was unable to make repayments for several months. When he returned to work his income was reduced as his role had changed. Jim was not able to pay the arrears and sought assistance from the FSP. The arrears were capitalised and the couple was able to continue to make ongoing repayments.

A year later, Angela was in a car accident and they had to rely just on Jim’s income. When they fell behind in payments again, the FSP commenced recovery action, even though the couple had told it of Angela’s accident.

In the telephone conciliation conference FOS noted that the second request for assistance arose out of a new and unforseen event and therefore the FSP should consider Jim and Angela’s request for assistance with new eyes. The FSP agreed to provide three months for the couple to finalise an insurance claim and determine whether the change in their combined circumstances would enable them to recommence repayments to the loan in the future. If, after a period of time, the couple felt that they would be able to recommence payments to the loan, the FSP agreed to explore how the arrears could be repaid, either by varying the loan or by some other means.

If Jim and Angela considered that their circumstances would not enable repayments to recommence, the FSP also agreed to offer a reasonable period of time for them to sell the investment property. 


Julia had purchased a number of investment properties. Her financial position changed and she experienced difficulty paying the difference between the rental incomes received and the repayments required on the loans. This caused the loans to fall into arrears. Julia considered that as this was a long-term change to her financial position, the investment properties would need to be sold to reduce the debt owed to the FSP. 

While trying to sell the properties, Julia learnt that the local property market had changed and the properties could not to be sold for anywhere near their original purchase price. It was clear to her and the FSP that the sales would result in a shortfall.

FOS conducted a telephone conciliation conference and the parties reached an agreement on a timeframe for sale and a repayment amount that Julia could sustain both prior to and after the sale of the investment properties. The FSP also agreed to restructure the residual shortfall debt from the sale of the investment properties so that it could be repaid at the rate the parties agreed Julia could afford. By working together, Julia and the FSP were able to overcome a highly uncertain situation, and the outcome was an agreement that worked for both parties.

General Insurance Conciliations: Building bridges to resolve disputes

This case study is based on an actual dispute conciliated at FOS. The FSP has given permission for us to use the details.

N had a bridge going across a small creek on her property. The bridge was the only way to access her property.

A large delivery vehicle crossed the bridge to enter the property and after it had crossed, the bridge collapsed.

Without the bridge, the property was cut off and no vehicles were able to enter or leave the property. As the delivery vehicle was stuck on the property and unable to leave, N contacted a local builder who removed the damaged structure and installed a temporary culvert as an emergency measure. This work cost $7491.

N lodged a claim with her financial services provider (FSP) for “impact to her bridge by a vehicle.”

The FSP sent an engineer to assess the bridge, they reported that the cause of the collapse was the bridge being under-capacity and vehicle being over-capacity – in other words, the bridge was not capable of holding the weight of the vehicle. The report also stated that the bridge was deteriorating over time and was showing signs of weakening.

The FSP denied the claim for the cost of the culvert and for rebuilding of the bridge. Though it didn’t deny that a ‘prima facie’ claim had been proven (the impact to the bridge), it said that three policy exclusions would apply to allow it to deny the claim:

1. the policy did not cover loss caused by wear and tear, rust, corrosion, deterioration etc
2. the policy did not cover loss to driveways, paths or paving caused by a road vehicle, and
3. the policy did not cover loss caused by structural or design fault that existed before the event.

The parties agreed to conciliate, and both the FSP and N brought a great attitude to the conciliation.

The setting allowed N to describe the circumstances of the event in a way that couldn’t be done through normal insurance claim data – for example, she explained the remote location of her property and the fact that she lives alone. She also talked about the emergency nature of the situation in that there was no access to and from her property in a remote rural area. Issues of trust, credibility and reliability were discussed.

The FSP was able to discuss the relevant policy provisions and the engineer’s report.

Sharing this additional information helped the parties to understand each other’s position. As a result, they were able to reach an agreed compromise. While the applicant had initially sought reimbursement for the culvert and costs for rebuilding the bridge, after discussing the matter the FSP offered the applicant an ex gratia payment which resolved the dispute.

It was a successful outcome for both parties and demonstrates the benefits of open discussion between parties in resolving complex disputes.