Last updated 3 August 2016

Sometimes a seller of goods makes promises about finance. Section 128 of the National Credit Code provides that lenders will be liable for the misrepresentations made by a seller when that seller has referred the borrower to that particular lender (linked credit provider).

For example, if a car salesman refers a potential buyer to a lender and also makes certain false statements about the finance provided, the lender will be liable for any loss that the borrower suffers as a result of relying on those false statements.

Lenders are liable for the misrepresentations of their staff. If a loans officer makes misrepresentations to the borrower in the course of processing the loan, the lender may be held accountable for those misrepresentations. However, it should be noted that lenders may not be responsible for the actions of independent finance brokers. Finance brokers are seen as representing borrowers rather than lenders, but they have obligations under the National Consumer Credit Protection Act 2009 (Cth). They must also be licensed and belong to the Financial Ombudsman Service or the Credit and Investments Ombudsman where complaints about their conduct may be made.