In David’s view, the bank would not have lent to his son if it had undertaken appropriate credit and criminal checks, enquired into his account conduct, and sought confirmation his son was living rent-free, as claimed. It should also not have approved the loan because he was on trial period at work, with no guarantee of continued employment.

In response, the bank said:

• The son met its standard lending criteria.
• It was not standard practice to obtain customer criminal records before lending, or to speak with a loan applicant’s family.
• It had no evidence from account transactions, or elsewhere, that the son paid board because he paid cash.

Our investigation

David was not satisfied and complained us. We cannot investigate commercial decisions about lending, but we can investigate irresponsible lending allegations. We consider lending is irresponsible if information available at the time of lending indicates the customer may be unable to make required repayments.

In this case, we could not find irresponsible lending because:

• Repayments were affordable based on information the son provided.
• The bank did an appropriate credit check.
• The bank was entitled to assume application details were accurate because it had no information to suggest otherwise.
• The bank was not obliged to confirm details with David or his family.

We also considered we were unable to interfere with the bank’s commercial judgment to lend to someone who in all other respects met its lending criteria but was on a 90-day trial period. Similarly, banks can decide whether a person’s previous account conduct meets lending criteria.

Outcome

We declined David's complaint.