Take my KiwiSaver and can’t we call it quits?
A cancer sufferer, whose debt to Westpac Bank left her unable to afford the food and supplements recommended by her specialist, is warning people to beware of Westpac’s current 0 percent debt consolidation offer.
Sue Sherwin would never have thought of herself as a vulnerable bank customer. She’d started helping her dad with his accounts when she was 12, and had worked all her life, sometimes two jobs.
She’d held management positions and run her own businesses, despite two bouts of cancer and having the chronic, debilitating and painful bowel condition Crohn’s disease.
She’d brought up two children.
She was strong and independent.
But in 2013 what she also had was more than $23,300 of debt to Westpac Bank, built up on credit cards during periods when she’d been off work due to her illness.
In 2018 when Sherwin was forced to stop working, possibly for good, after spinal surgery, a double mastectomy, and an immune system reaction which left her with a constant high temperature and multiple allergies, she was in big financial trouble.
“I don’t want this. I want to be able to work. But I can’t.”
And on a sickness benefit there was no way Sherwin could pay her Westpac loan back.
Hardship by numbers
Sherwin’s original loan in 2013 was $23,300. By June this year, she had already paid Westpac $26,600 - $3,300 more than she borrowed. But $20,000 of that $26,600 was in interest. She still owed the bank more than $17,000.
Until Newsroom contacted Westpac, which then apologised and reached a settlement with Sherwin, she was paying $280 to the bank, money she couldn't afford. But her debt barely shifted, because $200 of that came from interest payments. Only $80 went towards reducing her loan.
“I look at what they are charging and even if I live for 20 more years, I don’t think I would pay it off,” she told Newsroom.
Sherwin is 54.
In a letter to Westpac’s “financial solutions” team in February last year, she laid her cards on the table. She told them about the cancer, the Crohn’s disease, the spinal surgery.
“I had my third operation in 10 months on January 24, 2018,” she told them. “Instead of putting all my energy into healing my body I am stressing over my Westpac debt and lack of income.
“The specialists still don’t have any answers as to why I am continuously running a high temperature. I am booked in for a CT scan where they are looking for more cancer.
“I have no idea when I will be able to work again. I have now survived cancer three times but my future is very uncertain.”
Take my $10,000 KiwiSaver
In the letter, Sherwin offers her $10,000 KiwiSaver funds to Westpac if they can write off her remaining debt. “Is there an officer of the bank that I could sit down and meet with face-to-face who has the authority to negotiate some sort of settlement?” she asks in the letter. “I have a KiwiSaver account with a small amount of money in it and I understand they may let me break it, considering my circumstances.
“I have been going without everyday necessities so I can keep paying Westpac, but I give up. I just can’t physically, emotionally or financially continue. Please help me get closure on this.”
Sounds like a good deal all round. Sherwin pays $36,000 on a $23,300 loan, but gets freedom from the bank.
Westpac said ‘No’.
A member of the “customer care” team came back a week later, apologising for not having responded sooner. She was off sick, she said, without a trace of irony.
“We have reviewed this along with my leader and can confirm that we would not agree to accept a full and final reduced settlement for this debt,” she said.
“The standard collection process is that once a loan account is in arrears for 90 days, a demand will be issued for the arrears to be paid in full within 14 days. If the arrears are not paid then the total debt will be transferred to an external collection agency, who may add their collection cost and contact you... This may also have a negative impact on your credit rating.”
There is no offer of a face-to-face meeting, and Sherwin says when she rang Westpac’s “financial solutions” team, she was told it didn’t have any staff who met with customers.
“They don’t want me to pay it off,” Sherwin told Newsroom.
Westpac’s financial performance
It’s not as if Westpac can’t afford a little leniency. This is a seriously profitable banking operation.
The New Zealand arm of the bank alone made a profit of more than half a billion dollars in the six months to the end of March 2019. The Australasian operations made $A8 billion last year.
Announcing the New Zealand half year result earlier this year, CEO David McLean said the bank “had benefitted from its ongoing focus on customer outcomes”.
“Our purpose is to help our customers financially to grow a better New Zealand,” he said. “That starts with working to ensure we’re delivering great service and great outcomes for customers each and every time they interact with us.”
It’s hard to know what that Westpac customer care team was thinking. The bank isn’t commenting on its reasons, though they gave Newsroom a statement, which you can find at the end of this story.
Perhaps Westpac staff thought Sherwin wasn’t really that ill? Yet her doctor had written to Westpac in August 2017 asking for mercy.
“Mrs Sherwin is a courageous and honest woman who I am sure is honourable in her intentions to the bank,” he said. “I would appreciate if her current medical circumstances could be taken into consideration with regard to her dealings with your bank.”
The doctor wrote again in May 2018. He listed all her surgeries, her medical conditions and the drugs she was on.
“This woman has suffered a perfect storm of medical diagnoses and interventions over the last year,” he said. “I would hope these could be considered in assessing her financial position and the difficulty she has had in fulfilling her obligations.”
Petrol is a luxury
Sherwin says all her available money goes towards paying off her loan.
“I buy and sell clothes on Trade Me and if I get $30 I pay that to Westpac. I got money for my birthday. I gave it straight to the bank.
“I can’t afford supplements that my specialists have suggested could be beneficial for my quality of life. I can’t afford to go to the dentist, I cut my own hair, petrol is a luxury.”
She’s got this fight for her life every day, and then there’s the bank.
Kevin Townsend is a former journalist who now co-owns pop-up luxury wedding company SimplyWed. He’s a friend of Sue Sherwin, and has watched with horror her dealings with Westpac.
“Having the bank constantly on her back, even ringing repeatedly on weekends to ask for a few dollars she’s behind in payments, makes [trying to get well] so much more difficult. You can see it wearing her down.
“I don’t know how she copes, to be honest. She’s got this fight for her life every day, and then there’s the bank. That’s a psychological burden that keeps gnawing away at her."
Townsend says friends - and even people at Westpac - have suggested Sherwin just go bankrupt.
But she says that’s not an option for her. As a kid helping her dad with his plastering business, she decided bankruptcy was the coward’s way out
“We were owed money by people who went bankrupt and then opened up another business.
“I’ve always thought of people that have gone bankrupt as taking the easy way. I don’t want to leave that behind for my children. All I have left is my pride and I’m not giving up.”
Sherwin said one of the biggest reasons she approached Newsroom with her story two weeks ago was because she saw Westpac advertising a credit card product to help people “get debt-free faster”.
It made her so angry.
“I heard the ad on the radio and they said ‘Bring all your debt to us and we’ll give you 0 percent interest for 12 months. And I wanted to say to people ‘Just don’t! Don’t! What are they going to take after the 12 months is up’?"
Westpac’s standard credit card interest rate is 13.45 percent at present. Sherwin has been paying 13.95 percent on her debt. Westpac’s home loans start at the “one year special” rate of 3.79 percent.
Kevin Townsend said it made him furious that Westpac cultivates a sympathetic public persona, yet when it comes to Sue Sherwin and her cancer, there appeared to be no sympathy at all.
“I understand Westpac support the efforts of their staff raising money for cancer charities, and of course there’s the Rescue Helicopter. They love being associated with health and helping those in need, except when it gets in the way of them making profits.”
Vulnerable customers - or rather the banks’ treatment of vulnerable customers - is a major issue for financial institutions and regulatory bodies all over the world.
One problem is that vulnerable customers are not easy to define. People who aren’t generally vulnerable might become so if they get sick, lose a partner or get made redundant.
Suddenly everything changes.
“Vulnerability is particularly challenging in the context of financial services, due in part to the long-term nature of commitments, and the complexity of products and information,” says the UK’s Financial Conduct Authority in a 2015 report.
And people are particularly at risk “when a firm is not acting with appropriate levels of care”, the report says.
Australia’s Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry spent many hours focused on vulnerable customers.
And even the less-in-depth November 2018 conduct and culture review by the New Zealand Financial Markets Authority and the Reserve Bank noted “significant progress is required” by all banks into “incorporating a strong customer focus into their product design, sales processes and how they treat vulnerable customers”.
Consumer New Zealand’s head of research Jessica Wilson says she is “stunned” Westpac didn’t attempt to tell Sherwin what her rights were.
“Banks have obligations as responsible lenders to help customers when there is a problem repaying a loan, and they should be letting them know where to take a complaint if there is a dispute.”
Wilson says there are four different disputes resolution schemes, but too often banks don’t tell their customers about them.
“These schemes aren’t worth anything if consumers don’t know.”
Wilson says it’s hard to tell how widespread the problem of vulnerable customers is in New Zealand, because most people have no idea what their options are when they get into financial trouble, and don’t know how to complain.
Certainly Westpac didn’t give Sherwin any options in its February 2018 letter.
“I suggest you seek independent financial advice to discuss your options,” the financial solutions team told her. “Your local CAB or budget service should be able to provide someone to assist you with this.”
“We’re here to help”
Do a Google search for ‘vulnerable customers’ and ‘debt hardship’ and 'Westpac' in some combination and you may end up on the “Westpac Assist” page. It’s on the Australian not the New Zealand site, but the message is clear.
“We know that financial stress can sometimes be a result of unplanned life events such as change of income, illness, a relationship breakdown, reduction in your business cash flow or emergency events like natural disasters,” the page says.
“You are not alone. We are here to help.”
So how did it go so horribly wrong with Sue Sherwin?
A happy ending
Westpac isn’t commenting on that. But after being approached by Newsroom with questions about Sherwin’s debt, the bank has this week apologised to her and issued a statement.
“Westpac NZ is committed to helping customers in financial hardship. We sympathise with Ms Sherwin’s circumstances and have worked regularly with her since 2013 to help her manage her debt.
“However, having reviewed her case, we believe we should have given further consideration to her situation when she approached us in February 2018. The way we handled this conversation did not meet our standards of care.
“We have contacted Ms Sherwin this week to apologise and following discussions we’re very happy to have reached a positive outcome.”
Part of that settlement includes a confidentiality clause which prevents Sherwin telling Newsroom details of that settlement.
But we really hope it’s a good one. She needs the break.
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