Consumers pay a high price for protection

Then, genuine borrowers would save on interest - perhaps up to 0.5 per cent - throughout the whole term of their loan, occasionally parting with a fee charged on an hourly basis if they wanted to change some detail of their account.

But if we did that, a lot of people would get upset - even if we told them the rules beforehand. They’d go to the industry ombudsman. Now I’m in favour of the ombudsman having agitated for its introduction before one existed. It’s much fairer and more efficient at dispute resolution than our scandalously ramshackle court system. It will help drive rogues from the industry.

But ... because the Ombudsman was designed to appease consumer groups, its founding assumption is that consumers are always the victims - never businesses. So its costs are met by the businesses consumers bring before it.

In five years we’ve never been taken to the Ombudsman. But if we were, we’d be charged $200 for the initial referral, a further $2,000 for conciliation and then another $5,000 for the Ombudsman to rule! That’s even if we successfully defended ourselves! The consumer won’t pay, no matter how vexatious or outrageous their conduct, no matter how unreasonable their expectations of us.

Again, there’s nothing wrong with this situation that a small deposit refundable on a successful outcome couldn’t solve to deter frivolous complaints.

So you can you see why we’re not falling over ourselves to rock the boat with this new style of lower margin “fee for service” lending? Most consumers are very reasonable people. But given that even if we win all our cases, each unreasonable consumer can cost us over $7,000, we won’t be taking any chances by upsetting the apple cart.

In the meantime if you’ve got an average loan think of this. Consumer protection is “protecting” you from paying around $50 a month less, on your loan.