Bank slammed for charging dead man

Kate and Michael Vaughan on their wedding day.


WHEN Kate Vaughan’s husband died after a tragic parachuting accident last year, she lost her soulmate.

Champion Australian skydiver Michael Vaughan, 45, died in hospital after a midair collision over Byron Bay in March 2015. His death shocked the aerosport community and left Mrs Vaughan grief stricken just six years after meeting the love of her life.

In a bittersweet fulfilment of his last wishes, she was able to honour Mr Vaughan’s legacy by administering a bequest in his will of $100,000 for the Australian Parachute Team.

But getting her late husband’s affairs in order proved far more challenging than she could have imagined when dealing with one of the big four banks, which she said refused to let her pay off Mr Vaughan’s loans and charged a “significant amount” of interest, fees and charges to his account.

Now she is campaigning for banking industry changes to ensure that cases like her husband’s are treated fairly and consistently.

“Grieving families have enough to deal with without greedy banks exploiting them when they are at their most vulnerable,” she said.

Kate and Michael Vaughan shared a love of skydiving, representing Australia in the sport.

Kate and Michael Vaughan shared a love of skydiving, representing Australia in the sport.Source:Supplied

A NIGHTMARE ORDEAL

During the eight months that it took to be granted probate by the Supreme Court, Mrs Vaughan worried about a number of loans in her husband’s name.

“I rang them and said, ‘I know our finances, I know there are loans sitting there going to accrue interest. Please can you give me some statements, tell me where they’re at, what can I do to pay anything off?” she told news.com.au.

The bank, which she is barred from naming after reaching a confidential settlement, refused to pass on details until the probate had been settled.

“Then when I did get probate and asked for a statement there was an enormous amount of money that had been racked up,” she said.

After posting about her plight on social media, Mrs Vaughan finally reached a deal for the interest charged after her husband’s death to be refunded once she had paid off the balance of the loans.

“They did return it but only after I paid the loans off in full including the interest — and only after two months of badgering them through my own lawyers and them putting me through hell,” she said.

The whole episode cost her $5000 in legal fees, and robbed her of the peaceful space in which to grieve. “It was a nightmare and no-one should have to endure this on top of the trauma of a significant loss.”

Michael and Kate Vaughan met through skydiving, and fell madly in love.

Michael and Kate Vaughan met through skydiving, and fell madly in love.Source:Facebook

She launched an online petition demanding change, which attracted more than 20,000 signatures — and a flurry of messages from people who had endured similar plights.

“There are lots of people who’ve had a bad experience, but lots that have had a good experience; it’s not consistent,” she said.

“I’ve heard so many stories of people in terrible situations, of losing their son in a car accident and his mortgage being lumped with interest repayments and fees. A lady with a daughter who was in an accident in a coma, and in the period between her daughter’s accident and her being able to get power of attorney, all sorts of fees and charges and interest accruing.”

Mrs Vaughan has called for new rules to stop interest, fees and charges from being levied after a person has died, appealing to Financial Services Minister Kelly O’Dwyer and Treasurer Scott Morrison for help.

At present, the banks use their discretion in dealing with deceased customers’ accounts, meaning that the families of about 150,000 Australian adults who die each year have no way of predicting how their cases will be handled.

WHAT TO DO IF A LOVED ONE HAS DIED

Lawyer Pam Suttor, an estate law specialist, said family members had two options when managing their deceased loved ones’ affairs while waiting for probate to be granted.

“If you’ve got money, you can keep paying the mortgage or loan — anybody can pay money into an account of a debt, you just can’t take money out,” Ms Suttor explained.

And if you did not have the cashflow to make the payments, for example when the assets of the estate must be sold to cover debts, the best thing to do was contact the bank for a frank discussion.

“Let the institution know when it is likely to be paid and, if it’s a mortgage, negotiate a lower payment while you’re waiting.”

A Commonwealth Bank spokeswoman said the bank had dedicated teams available to help with deceased estates as “each case is individual and can vary in complexity”.
“Once we are advised of the passing of a customer we ensure their accounts or lending products are flagged as appropriate as a deceased estate in our systems,” the spokeswoman said.

“Any investment or savings accounts will continue to accrue credit interest, and individual accounts will stop being charged any monthly account fees. Lending products will continue to be charged the debit interest and fees until the debt is paid out.”

A NAB spokeswoman said the bank’s processes for accounts once a customer has passed away varied depending on the type of product and the customer’s individual circumstances.

“We encourage family members to contact us so we can discuss the options regarding their loved ones’ accounts, and to access NAB’s financial hardship assistance program if needed,” the spokeswoman said.

A spokesman for ANZ said while complexities could arise “depending on the structure of accounts”, the bank had a policy of waiving fees and interest on credit cards and personal loans for deceased estates and did not charge “break fees” for term deposits.

“We are currently looking at ways to enhance our approach to mortgage and transaction accounts to make the process simpler,” the spokesman said.

Westpac did not respond to a request for comment before deadline.

dana.mccauley@news.com.au

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