Repayment plan contained obligations for bank and customer

Categories:
Overdue council rates
Summary:
Sam fell into arrears with her home loan repayments. The bank asked her to sign a repayment agreement confirming her own proposal to continue making repayments, along with paying an extra $250 a week in arrears. Sam failed to meet the terms of the agreement, and the bank began recovery action.

Our investigation

Sam complained to us that the bank had treated her unfairly. We found that the bank had treated her reasonably. It agreed to various repayment proposals, none of which Sam kept. The most recent repayment agreement said the bank would start recovery action if she failed to keep to the agreement. Doing so was, in our view, a matter of commercial judgement, and we declined to investigate the complaint.

Several months later, Sam again asked us to investigate, citing fresh examples of procedural unfairness. She said the bank had asked her to sign a repayment agreement by a certain date and had made clear its intention to take recovery action if she failed to keep to the agreement.

Sam considered this unreasonable, given her view that the bank had made mistakes in managing her account. The bank had previously transferred money to other accounts to repay loan arrears, and on one occasion debited council rates when Sam believed she had applied to her local council for rates relief. 

We talked to the bank about the complaint and agreed to discuss the repayment proposal with Sam. During that discussion, it became apparent Sam did not realise that the agreement also bound the bank. She had to put a certain amount of money into her account, but the bank in turn agreed not to deduct more than the regular loan repayment and the $250 payment towards arrears. 

The bank confirmed that, in the event of a rates demand from the council, it would follow its usual practice and write to Sam before debiting her account. 

Outcome

A reassured Sam agreed to sign the repayment agreement.

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