2015 - 2016

Lending

Property lending

Mr N had a bank loan which he thought was fixed for two years. However, he found the bank had applied its higher three-year interest rate when, two years later, he discovered his loan had another year to go before the rate ended.  He complained to his bank saying he was now paying more interest than he would have if the loan had been fixed for two years.

Mr N wanted his loan put on the two-year fixed rate but the bank declined to do so. It said there was no evidence he had requested the two-year rate rather than the three-year one. It also said Mr N should have become aware of the issue sooner because the fixed rate and term were listed on his monthly bank statements. Mr N accepted that he should have, but felt the bank was responsible for the error in the first instance and should fix it. The bank offered Mr N $2,000 compensation as a gesture of goodwill but Mr N wasn’t satisfied and brought his complaint to our office.

While there was no conclusive evidence about what rate Mr N asked for, the bank had recorded a diary note which demonstrated he was shopping around and showed he had asked the bank to match a competitor’s rates. While it matched the two-year rate, it didn’t match the longer one. On this basis, we thought it was likely Mr N had requested the two-year rate.

The bank then offered to break the loan free of charge. It also offered to reimburse half the additional interest charged, acknowledging it may have made an error, but that Mr N contributed to his loss by not checking statements for two years. Mr N accepted the offer and the complaint was resolved.