Good evening all.
There is a lot of talk about the infamous "all monies clause" and how the banks have this evil, venomous section of their contracts design to take advantage of customers.
Problem is, I have just gone through almost an entire booklet of terms and conditions and cannot find mention of it. Nor is it is the contract, security schedule or any part of the banks information. I am on to my second of the major 4 banks contracts and they don’t have it either.
Is it real? Is it a myth?
I asked Google and found plenty of references. One article on 9 money states the banks removed these clauses from contracts way back in 1996. I also found out that they were ruled as ‘unjust’ within the meaning of s 7 of the Contracts Review Act 1980.
So it appears for loans regulated under the UCCC it does not appear. Most of the major 4 have identical home / investment loan contract whether regulated under the UCCC or not; therefore they simply do not have this clause in the contracts.
I have read an all monies clauses in the past – however it was in a invoice discounting contract – not home or investment loan.
p.s. commercial / business loans may still have them…
Banker
Hi Banker
I think it is a bit of a myth myself.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
A great point of discussion banker – one that I have had some …er 'discussions' over (sounds better than heated disputes) in the past with bank credit areas. One major in particular is adamant in their business lending area that the all monies clause is the reason that all 'business lending' customers have to have residential loans crossed. The retail area of the same bank it just depends on who you get – but if you ask for it to be 'stand alone' it is no drama – and appears on the loan docs as such. The reasoning the credit area and many 'bankers' in the business banking side say the contract must stipulate all securities are crossed and list al together on the loan contracts is because of both the all monies clause, and because they are crossed on this basis whether the cusotmer likes/what or knows it or not. I went down fighting, and proved in my opinion that the part of the credit 'policy' they quoted to support this argument was ambigious, and could be interpreted either way. I lost track of how many non crossed loans I did when I worked in a different area of the bank earlier on. Yet they take the 'all monies clause' so seriously that business bankers found to not cross properties (one that I heard of was a refi from ANZ – three properties – three loans – all seperate that were 'refinanced the same way to the bank as requested by client and the business banker agreed to do as the best way too for the client) are being put on 'behavioural warnings & monitoring' – with the 'ALL MONIES CLAUSE' being the reason given, (Nothing to do with wanting as much security as possible, and wanting to nab (whoops) the customer to the bank for life of course!!!!!!!)
So after all that, my understanding is technically by the letter of the law, if a bank loses money foreclosing, and cannot claim from an LMI policy, the all monies clause means they can recover that from any other savings account, term deposit, or loan redraw funds the customer has – and if not, could sell another property even if it is not 'cross collatorised'.
Not a common scenario, but does that sound about right? Please excuse the spelling tonight – glasses in the other room! Cheers
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