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New protection for guarantors

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25 November 1992

New protection for guarantors

Amendments to privacy legislation agreed by the Senate last night give new protection for people who act as loan guarantors by ensuring that they have access to full knowledge of the financial status of the borrower.

The changes honour a commitment given in March this year by the Federal Minister for Justice, Senator Michael Tate.

As a result of the amendments, a bank, credit union or other credit provider will be able to give information concerning borrowers to potential guarantors.

Senator Tate said the changes to the Privacy Act would cover an important deficiency in the level of protection previously given to guarantors mortgage.

He gave an undertaking to the reform of this area of law when, as Minister for Consumer Affairs in March this year, he addressed a Trade Practices Commission seminar on consumers and banking.

At that time Senator Tate referred to the case of an elderly immigrant couple who provided several guarantees and a mortgage to secure a number of business and personal loans to their son.

“The elderly man was poorly educated and had little grasp of business matters, his wife had a long history of mental instability, and both were pensioners reliant on their bank manager for financial guidance.

“Yet the bank neglected to inform the couple of their son’s poor financial state, and the collapse of the son’s business resulted in complex legal proceedings to protect the assets of the elderly parents”.

Senator Tate said the amendments to the Privacy Act would remove any doubt about the ability of the lender to provide appropriate information to guarantors.

Released by Adrian Wild 06 277 7260