^Holy moley! Good find, ffc. I wonder why they don't lodge a class action with the 100 claimants seeing there is now a precedent (i don't mean in the strict legal definition) of RHG settling... This has implications for quite a few other lenders who now have a "captive audience," some of whom were mentioned earlier in this thread.
RAMS loans transferred into RHG - is it legal?
- Thread starter Nobody
- Start date
Present Ms Jade !
Yes, it was interesting at the time how my thought process was shot down by pretty much anyone who responded, including the Loan writers that lurk here.
You will also find that my comments regarding the solvency of the US financial system have turned out to be 100% accurate.
It's all so easy in hindsight, but I make my living trading the future so can't afford to live in the past, nor run with the herd.
I read the essay written by our Prime Minister a few weeks on the Global Financial Crises.... and IMHO he now has an excellent handle on the problem (as opposed to his understanding of the situation during most of last year).
A very clever man we have as PM, and I vote Liberal!
Anyway, I urge all disgruntled RHG clients to keep the blow torch on them....
Also don't forget Westpac in this matter, they are the ones who should (IMHO) stand shoulder to shoulder with RHG in the Defence seat.
Their "deal" with RHG... and the "conditions" that came with it sold 1000's of honest taxpaying Australians into the Abyss...
Cheers.
Nobody...
Yes, it was interesting at the time how my thought process was shot down by pretty much anyone who responded, including the Loan writers that lurk here.
You will also find that my comments regarding the solvency of the US financial system have turned out to be 100% accurate.
It's all so easy in hindsight, but I make my living trading the future so can't afford to live in the past, nor run with the herd.
I read the essay written by our Prime Minister a few weeks on the Global Financial Crises.... and IMHO he now has an excellent handle on the problem (as opposed to his understanding of the situation during most of last year).
A very clever man we have as PM, and I vote Liberal!
Anyway, I urge all disgruntled RHG clients to keep the blow torch on them....
Also don't forget Westpac in this matter, they are the ones who should (IMHO) stand shoulder to shoulder with RHG in the Defence seat.
Their "deal" with RHG... and the "conditions" that came with it sold 1000's of honest taxpaying Australians into the Abyss...
Cheers.
Nobody...
By settling out of court, Consumer Action have failed to get a legal precedent established, as you point out. They wanted a test case and still don't have one.
From memory, they were coming at the issue under s72 (unconscionability of early termination fees) of the credit code which, as currently worded, would have been a relatively straight forward question of fact.
They fact the Consumer Action crew were prepared to settle on a confidential basis is curious if their case was stacking up in my view.
I'm not sure they've progressed anything but time will tell.
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This is a great thread and an excellent example of how useful this forum can be. To get such expert knowledge, variety of opinion and respcetful discussion is a terrific boon for all those on the forum. Added to that, the posting of relevant links/information/resources.
So congratulations to all who have contributed!
My 2 cents worth.
One thing RHG has certainly NOT done is live up to its promise of retaining the same service standards as the former RAMS. (A nice letter was sent when the change occured assuring we former RAMS clients of this)
Just one example of this is having a "service" department that is only contactable by fax or email and the lack of quality of the responses from this department.
I remember reading that Australian law in the area of competition was, relative to other like countries, quite ineffective at stopping anti-competitive practices. This had led to the development of small groups of very powerful companies who dominate certain industries.
Even price discounting, which appears very competitive behaviour, can be deemed anti competitive if the goal is to wipe out the new boys. Just really tricky to prove. The aviation industry in Australia is a good example but there are many others.
I am particularly irked by RHGs $990 fee to pay out the loan. I'm okay with the DEFs, I knew about those. But the legal/payout fee is excessive and unjustifiable. Their answer (by email of course)- "That's the fee we charge"
The government has shown some willingness to have bank fees charged match the cost of their provision (such as the recent ATM charge review).
Oh well, one more to refinance in a month or so and then I am in the clear; somewhat wiser and more cynical.
So congratulations to all who have contributed!
My 2 cents worth.
One thing RHG has certainly NOT done is live up to its promise of retaining the same service standards as the former RAMS. (A nice letter was sent when the change occured assuring we former RAMS clients of this)
Just one example of this is having a "service" department that is only contactable by fax or email and the lack of quality of the responses from this department.
I remember reading that Australian law in the area of competition was, relative to other like countries, quite ineffective at stopping anti-competitive practices. This had led to the development of small groups of very powerful companies who dominate certain industries.
Even price discounting, which appears very competitive behaviour, can be deemed anti competitive if the goal is to wipe out the new boys. Just really tricky to prove. The aviation industry in Australia is a good example but there are many others.
I am particularly irked by RHGs $990 fee to pay out the loan. I'm okay with the DEFs, I knew about those. But the legal/payout fee is excessive and unjustifiable. Their answer (by email of course)- "That's the fee we charge"
The government has shown some willingness to have bank fees charged match the cost of their provision (such as the recent ATM charge review).
Oh well, one more to refinance in a month or so and then I am in the clear; somewhat wiser and more cynical.
Well said fatboy,
I am in the process of applying for a refinance from RHG to RAMS.
Something about that statement even seems to be "wrong" and begging the questions :
1. Didn't I apply for the original loan to be with RAMS?
2. Why should I have to pay $8000 to move from a loan that was originally with RAMS to RAMS again?
Which brings us back to the vicious circle of the legality of the whole issue of the "old" RAMS versus the "new" RAMS versus the original loan contracts.
Regards JO
Totally unsubstantiated opinion (rare on this board, i know
) that RHB lawyers have bigger cahones than Consumer Action lawyers, the latter of which may well have been subdued by threats of looong & expensive court delays...
Josko,
I am financing away from RHG at 8.16% (if 60 baisis points is the recent interest rate cut) to RAMS at 5.29%. The paperwork in mail for me to sign. Will make a big difference in repayments. Still copping a 1% Deferred Establishment Fee from RAMS for next 4 years but its worth it.
I reckon RHG will be left with most of the following borrowers-either those locked in at fixed rates or on variable rates but unable to easily refinance (due to insufficient lvr/no abn and gst for 2 years/default in interest payments/poor credit history). The latter will be just desserts for RHG.
On Hotcopper some RHG owners were crowing about their latest result and the rising shareprice (up from 5 c last August to 21c today). I am hoping the quality of their earnings and shareprice decline from here on in.
"Approximately 20 cents per share profit in 6 months. Cash profit will be higher because some of their costs are non-cash (being the amortisation of the Deferred Acquisition Costs). So NTA will be north of 40 cents per share and likely to be more than 60 cents per share by the middle of the year, if they can keep hold of the warehouses. Some risk with the rise in defaults, but they are fully insured and losses last year were only $3 million (because they are only at risk if they don't meet the terms of their insurance). All in all about as good as you can get."
"Impressive result. Half year profit guide of $65-70mil. Shares on issue, 353 million. Thats a half year profit roughly equivalent to current share price. I understand the history of this company, but surely this seems like a bargain."
I am financing away from RHG at 8.16% (if 60 baisis points is the recent interest rate cut) to RAMS at 5.29%. The paperwork in mail for me to sign. Will make a big difference in repayments. Still copping a 1% Deferred Establishment Fee from RAMS for next 4 years but its worth it.
I reckon RHG will be left with most of the following borrowers-either those locked in at fixed rates or on variable rates but unable to easily refinance (due to insufficient lvr/no abn and gst for 2 years/default in interest payments/poor credit history). The latter will be just desserts for RHG.
On Hotcopper some RHG owners were crowing about their latest result and the rising shareprice (up from 5 c last August to 21c today). I am hoping the quality of their earnings and shareprice decline from here on in.
"Approximately 20 cents per share profit in 6 months. Cash profit will be higher because some of their costs are non-cash (being the amortisation of the Deferred Acquisition Costs). So NTA will be north of 40 cents per share and likely to be more than 60 cents per share by the middle of the year, if they can keep hold of the warehouses. Some risk with the rise in defaults, but they are fully insured and losses last year were only $3 million (because they are only at risk if they don't meet the terms of their insurance). All in all about as good as you can get."
"Impressive result. Half year profit guide of $65-70mil. Shares on issue, 353 million. Thats a half year profit roughly equivalent to current share price. I understand the history of this company, but surely this seems like a bargain."
I don't read it the same as TF, either. Though I doubt that the issue of costs was the primary consideration; the potential legal costs are small relative to the magnitude of a precedent.Totally unsubstantiated opinion (rare on this board, i know
My suspicion is that RHB offered a generous settlement to avoid the risk of setting a very expensive precedent. If RHB were confident that Consumer Action had no case, they'd want their day in Court, because winning in Court would set a precedent and deter all potential litigants in one fell swoop.
Remember that the decision to settle or not is up to the litigant, not their solicitors, and the RHB solicitors know that. Offering the litigant a generous settlement, enticing them to put their own pocket above the greater good, is a very cheap way of avoiding a precedent. Even if Consumer Action were keen to proceed to Court, if the individual they represented wanted to settle, that's what happens. And I suspect RHB made her decision quite easy - you can have this generous settlement provided it's confidential. Who can blame her for taking the bait?
I think we haven't heard the last of this, and further actions will follow. I think it's very hard to put a spin on this as anything other than negative for RHB's position.
Thanks Jo. My RHG variable rates will drop into the 7's%.
Thanks Tracey,
That makes sense to me.
As mentioned, AJAX, I am also refinancing back to RAMS.
I rang RHG a couple of weeks ago and was confronted by a very stroppy "young fella". I asked him why RHG were not dropping their rates in line with the RBA to which he replied,
"Think of it from our perspective. This is an investment loan for you. You are receiving an income from it." Huh? what has that got to do with anything?
Some smart people on board there.
Regards JO
That makes sense to me.
As mentioned, AJAX, I am also refinancing back to RAMS.
I rang RHG a couple of weeks ago and was confronted by a very stroppy "young fella". I asked him why RHG were not dropping their rates in line with the RBA to which he replied,
"Think of it from our perspective. This is an investment loan for you. You are receiving an income from it."
Huh? what has that got to do with anything?Some smart people on board there.
Regards JO
Ajax, do you mind sharing what your RHG exit fee equates to monetary wise, and putting aside the exit fee for a moment whats your weekly cash flow increase by switching over to RAMs 5.29%?
Im also with RHG variable rates on a couple 80% NO Doc loans with them - this for me offsets a higher interest rate because if I refinance away I wont get any better rate, plus I be subject to putting more of my own money into the equation due to lower LVR criteria.
To me, the CG exposure on the total asset value those NO Doc's are secured against offsets a higher interest component.
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Hi Rixter,
My RHG loan is only small at $146,200. ERF's will be 2%
This was originally an 85% lvr loan from former RAMS (now RHG) based on property purchase price of $172k
Property now valued at 190k resulting in RAMS 80% lvr loan allowing 152k in borrowings and lmi (in addition to this) can be capitalised (lmi on $152k loan=$944).
This means cash out of about 3k for me.
I can give you the name of the RAMS guy I have dealt with if you pm me. He will set out the calc's for you. I find him decent to deal with.
These are the calcualtions:-
Estimated Exit Fees
Discharge fee $295
ERF fee $2,924 (calculated at 2% x loan of $146,200)
legals $300
Total exit fees $3,519
New Loan Fees
Rams Application fee $0
Rams Valuation fee $200
LMI at 80% LVR $944
Rams Settlement fee $300
Various legals (3rd party) $100
Total new loan fees (including LMI) $1,544
Estimated Total Costs $5,063
less Rams rebate $1,500
(paid after settlement)
Adjusted costs $3,563
My RHG loan is only small at $146,200. ERF's will be 2%
This was originally an 85% lvr loan from former RAMS (now RHG) based on property purchase price of $172k
Property now valued at 190k resulting in RAMS 80% lvr loan allowing 152k in borrowings and lmi (in addition to this) can be capitalised (lmi on $152k loan=$944).
This means cash out of about 3k for me.
I can give you the name of the RAMS guy I have dealt with if you pm me. He will set out the calc's for you. I find him decent to deal with.
These are the calcualtions:-
Estimated Exit Fees
Discharge fee $295
ERF fee $2,924 (calculated at 2% x loan of $146,200)
legals $300
Total exit fees $3,519
New Loan Fees
Rams Application fee $0
Rams Valuation fee $200
LMI at 80% LVR $944
Rams Settlement fee $300
Various legals (3rd party) $100
Total new loan fees (including LMI) $1,544
Estimated Total Costs $5,063
less Rams rebate $1,500
(paid after settlement)
Adjusted costs $3,563
Yes, and I agree with you about RHB's motivation for settling.
Thanks Ajax, much appreciated. I dont think the new RAMS can help me as they dont do 80% NO Doc (pure equity lends) like I already have with RHG. As of a few years ago we no longer meet banks/lenders normal lending criteria.
RHG's product is good for my required type of lending compared to what else is currently out there. Sometimes its not just about rates.
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If Consumer Action were simply out to address their individual client's concerns I would agree with you. However, they made it clear they were looking for a precedent so I'm surprised they didn't push on.
I doesn't help subsequent litigants to any great extent.
Obviously, had RHG made an offer that was rejected by CA and the courts subsequently made a determination at the same or lower amount, costs would have been a big factor in CA's decision.
My point is that it wasn't ultimately CA's decision; they're not a party to the dispute, only representing one of the parties. If the client wanted to settle, CA didn't have the ability to force them to go to Court.
If CA were the decision-making party, I'd entirely agree with you.
