2015 - 2016

Lending

Non-property lending

Mr K had a personal loan with his bank, with repayments made from his transactional account.  He switched banks but his old account became overdrawn because he wasn’t depositing enough to cover the loan repayments.  The bank contacted Mr K a number of times advising the debt needed to be repaid. Mr K promised to clear the debt but after several months the account remained overdrawn. 

The bank then served notice on Mr K that his loan would be cancelled, his accounts closed and the debt referred to a collection agency if the overdraft was not repaid by a specified date.  He didn’t repay the debt so his bank proceeded with closing his accounts and referring the debt.

Mr K was unhappy with the bank’s actions, and then with how it handled his complaint so complained to our office.  He wanted the debt recalled and the collection agency listing cleared.

The bank offered to recall the debt from the credit collection agency so that he could avoid the additional collection costs, on the condition Mr K agreed to a weekly repayment arrangement.  However, the bank advised it was unable to have the adverse credit listing cleared.  Mr K did not accept the bank’s offer as he wanted his credit listing cleared. 

We found the bank was entitled to act as it had.  It had given Mr K a reasonable opportunity to clear the debt and warned what would happen if he failed to pay.  It had also warned not paying could adversely impact his credit record.  The bank was entitled to list the default with the collection agency, after which the default could not be altered or removed. 

We were satisfied the bank had acted lawfully and reasonably, and could therefore not uphold Mr K’s complaints.