Bank procedurally correct over rates arrears

Overdue council rates,
Zhang owned a property over which his bank had a mortgage. He could not pay his rates because of financial difficulties. The council wrote to him for several months about the overdue rates before advising his bank that it might issue it with a payment demand.
October 2014

The bank wrote to Zhang explaining that it would be legally obliged to pay the rates if the council issued such a demand. It would take the amount it had to pay from his account. 

Zhang contacted his bank to discuss his financial situation and the rates arrears. The bank approved a $500 overdraft, but was not prepared to lend any more. Zhang made a small payment towards the arrears. The council issued a demand on the bank to pay the balance.  The bank did so and debited the amount from Zhang’s account. 

Our investigation

Zhang complained that the bank had debited his account without notice or consultation. He said he had been in negotiations with the council. We reviewed his account’s terms and conditions. They gave the bank authority to debit the account for money owed to it. Having received the demand to pay the remaining rates, the bank was obliged to do so.


Zhang accepted our explanation, but felt the bank could have communicated with him better.  We found the bank had told him what would happen, and could not, therefore, agree.

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