David Johnston WA, Liberal Party, Shadow Minister for Defence
asked the Minister representing the Minister for Financial Services and Superannuation, upon notice, on 28 September 2011:
Does a bank require confirmation from every customer signing a guarantee that they have had the guarantee and its implications explained to them.
Nick Sherry Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism
The Minister for Financial Services and Superannuation has provided the following answer to the honourable senator's question:
The Australian Bankers Association has released the Code of Banking Practice. The Code sets out in detail what the member banks of the ABA will do before they take a guarantee. The Code of Banking Practice requires that before a guarantee is taken, the bank must provide a prominent notice indicating: that the person should seek independent legal and financial advice on the effect of the guarantee; that the person can refuse to enter into the guarantee; and that there are financial risks involved.
Banks have a duty to disclose relevant issues to a third party guarantor. In addition, guarantees may be overturned because of unconscionable conduct; instances of duress; undue influence; and inequality of bargaining power due to a specific disadvantage or disability.