The auction of the small commercial property was barely worth noting.
The Hoddle Street, Abbotsford showroom went under the hammer for $1.4 million in December and the world went about its business.
But for Denis and Joy Scanlon the sale represented one of the cruellest of outcomes of a dispute with the Bank of Queensland.
The couple allege predatory lending practices, blatantly inconsistent bank documents and negligent financial advice by an AMP-sponsored financial adviser, Sergio Arcaini.
On its side BOQ insists it did not engage in irresponsible lending and treated the Scanlons fairly after the couple, who are aged in their mid-70s, had difficulty repaying their loan and complained.
It doesn't end here. There's one last major asset to take.
"Prior to Christmas, by telephone, the receiver manager threatened to evict us from our home," says Mr Scanlon. "I've been told I don't even own the shirt on my back."
Financial planner settled case
Minister for Small Business and Assistant Treasurer Kelly O'Dwyer.
Arcaini compensated the couple in a confidential settlement in 2013.
AMP said it had not filed any breach reports on Arcaini to ASIC and helped customers who had received inappropriate advice. When asked if it had received other complaints about Arcaini, AMP said it was not appropriate to disclose details of individual clients.
BOQ received over $20,000 in commissions for originally referring the Scanlons to Mr Arcaini. Mr Arcaini, in turn, received over $100,000 in fees for managing the Scanlons' super.
The settlement and commissions earned haven't stopped the bank from now foreclosing on the couple insisting the loans used to create their "nest egg" are based on appropriate documentation.
We would never have signed that first loan if we knew we had to sell the property.Denis Scanlon
The Scanlons' problems have reached the chief executive Bank of Queensland, John Sutton, Assistant Treasurer Kelly O'Dwyer and the chairman of the Australian Securities and Investment Commission, Greg Medcraft.
In a letter to Mr O'Dwyer seen by Fairfax, Medcraft invites the Scanlons to report the matter but notes: "We do not formerly [sic] investigate every alleged breach of the law brought to our attention".
The Financial Service Ombudsman last week closed the couple's file saying the claim was above its maximum size.
Trouble began at retirement
Denis and Joy Scanlon's Scan-Hi mower shop in Abbotsford. Photo: Josh Robenstone
The Scanlons' troubles began in 2006 when the couple, then in their sixties, popped into a BOQ franchisee in Richmond to seek retirement advice after deciding to hand their business over to their son, David.
The branch manager, Nellie Dicks, invited the pair to attend an "information session" on "Business Success(ion) Planning" hosted by Genesys Wealth Advisers.
"We are pleased to advise that Sergio Arcaini is the chosen dedicated Genesys wealth adviser for the Armadale branch. Sergio has over 18 years in the industry and can help you create and protect your wealth," it says.
The Scanlons soon became clients of Genesys Wealth. In 2007 Mr Arcaini recommended the Scanlons take out a $1 million-plus loan secured by their commercial property and home.
The money would be invested to fund their retirement.
Plan went sour
Sergio Arcaini has settled with the couple.
By 2012, things had gone terribly wrong. The couple were bleeding money and their quarterly statements showed they were going backwards quickly.
They took their statement of advice and loan documents to another financial adviser, who was horrified by what he saw and recommended the couple complain to Genesys and BOQ.
It was the next year that Mr Arcaini made the confidential payment to the Scanlons.
The couple, following the advice of their lawyers, decided to not pursue BOQ at that point. They were told the six-year statute of limitations on pursuing commercial loans had run out.
It is a decision they regret and they have enlisted new lawyers to see if they can still challenge the loans.
The Scanlons took their statement of advice and loan documents to another financial adviser, who was horrified. Photo: Louie Douvis
In October 2014, BOQ called in receivers Ferrier Hodgson on the Scanlons' businesses, Scandon and Bountytan, over a $1.36 million loan issued to the couple in 2007.
Combined other existing smaller loans, some rolled over from another bank, the couple now owed about $2.2 million.
It is the terms and conditions of this 2007 loan that are at the heart of the dispute.
The Scanlons believed it was a one-year facility that was then rolled over each year after that at the same time as dividends from their investments and rent from their commercial property provided a modest income to furnish their retirement.
However, BOQ claims the loan was in fact a five-year facility that expired in August 2013. When the Scanlons did not repay the loan at that point it believed it was within its rights to call it in.
Property sale deal denied
Documents were only provided to the Scanlons after they engaged lawyers. Photo: Sam Bennett
The Scanlons allege the bank has also simultaneously claimed the original one-year loan was contingent on the sale of the Abbotsford property.
Documentation provided to the Scanlons in 2007 for their initial loan agreement and the 2008 "roll-over" loan documents makes no mention of the need to sell the property.
Important sections of the 2008 document, such as the interest rate, are left blank.
A crucial separate page of the loan document makes reference to the term being five years but the Scanlons insist this page was not provided in their loan pack from the bank.
The internal documents on their loan, referred to as the "long form" loan agreement, tell a different story.
These documents were only provided to the Scanlons after they engaged lawyers. The Scanlons say the documents include information they never provided to the bank and of which they were never aware.
Mr Scanlon questions why BOQ would go against the advice of its own risk manager. Photo: Wayne Taylor
The internal "long form" for the Scanlons' June 12, 2007, loan includes a handwritten note by a BOQ risk manager: "Approved subject to proceed of sales" from the Scanlons' Abbotsford property "to fully pay out this facility".
The document also states: "The Abbotsford property has been placed on the market and will be sold to an outside party (sale & leaseback) with the business to commence paying rent and the proposed facility cleared".
The 2008 "long form" loan agreement also says "customer has now received advice from his accountant to retain property".
Mr Scanlon says these claims by the bank on their internal documents are false. After all, the property, for example, was not on the market until the receiver's auction last year.
They also appear to be contradictory, Mr Scanlon says.
"We would never have signed that first loan if we knew we had to sell the property. The rent from the property was supposed to fund our retirement."
Mr Scanlon also questions why BOQ would go against the advice of its own risk manager, who in internal bank documents, only approved the loan on the condition the couple sell its property.
"Why would they give us a five-year loan when they say the first one-year loan had the condition we would sell the property?" Mr Scanlon says.
Mysteriously, the Scanlons' statement of advice dated August 30, 2007, makes zero mention of the loan to BOQ in the couple's list of liabilities despite the loan being issued in June 2007.
ASIC chairman Greg Medcraft. Photo: Michele Mossop
Naomi Halpern, a Victorian Senate candidate for the Nick Xenophon Team and a victim of poor financial advice, said what was happening to the Scanlons demonstrated an "abject failure by ASIC and the legal system".
"The statute of limitations is inadequate. Problems often do not surface until after the time limit expires. Legal avenues are closed to many who do not qualify for legal aid and who do not have resources to take on the deep pockets of banks," Halpern says.
"The result for Denis and Joy Scanlon is their business of 50 years has been ripped from under them and now the bank is gunning to take this 75-year-old couple's home. This system is broken and needs major reform not tinkering around the edges."
BOQ defends its conduct
BOQ has worked closely with Mr and Mrs Scanlon since 2012, said a company spokesman. Photo: Glenn Hunt
BOQ refused to answer a series of questions for the bank and Dicks regarding the loan documentation.
It also did not respond to questions regarding what commission the branch manager and Mr Arcaini received for the origination of the loans.
"BOQ followed all standard credit criteria when assessing Mr and Mrs Scanlon's applications for finance and was satisfied that they had sufficient income to service these facilities," a BOQ spokesman said.
"Both loans were assessed separately and approved by BOQ's Risk team, having met the required criteria. The spokesman added the bank is "satisfied" the loans were appropriate.
"BOQ has worked closely with Mr and Mrs Scanlon since 2012 in relation to their loan facilities and over that time has offered them numerous opportunities to provide repayment proposals. As no reasonable arrangements have been forthcoming, BOQ has unfortunately been left with no choice but to consider its enforcement options."
Differing cover letters
Bank of Queensland chief executive John Sutton. Photo: Ryan Stuart
Another puzzling element of Mr Arcaini's advice is the two remarkably different cover letters that exist for the Scanlons' statement of advice.
One letter is dated August 20, 2007. It is a generic cover letter that makes no reference to the sale of the Scanlon's Abbotsford property. It is attached to the statement of advice signed by the Scanlons on August 30, 2007.
The second letter, which is dated June 15, 2007 (2½ months before the couple signed their statement of advice) only came to light in 2013 after the Scanlons disputed their loan with BOQ.
It is the second letter, which the Scanlons say they never received, that is now being enforced by the bank.
The letter states: "In order to make the undeducted contribution, you would like to borrow the $1.5 million using the property at 60-62 Hoddle Street Abbotsford as security, allowing you to proceed with the sale in an orderly manner. On settlement for the property the proceeds will be used immediately to extinguish the loan. This enables you to take advantage of the opportunity with the current superannuation rule whilst allowing you time to properly market the property without undertaking a firesale".
A letter from BOQ chief Jon Sutton shows the bank has launched two investigations into the Scanlons' claim finding both times that their claim was without merit.
"Whilst BOQ referred Mr and Mrs Scanlon to the Genesys dinner function in 2007 it played no active role in the decision by Mr and Mrs Scanlon to procure a Statement of Advice from Genesys," Mr Sutton wrote.
The letter makes no reference to the financial relationship between Mr Arcaini and the bank's Richmond branch.
Mr Sutton also claims the Scanlons sought an extension of time to sell the property in 2008, a claim which the Scanlons deny.
Regarding the settlement between the Scanlons and Mr Arcaini, Mr Sutton says: "We note that no corresponding reduction had been made to the BOQ facilities as a result of the settlement payment."
Mr Arcaini did not respond to a series of questions he requested be sent to him via email.