Kenji complained the bank had delayed approving his loan (and therefore delayed transferring his account from his previous bank) and that this delay had been the cause of the company’s financial difficulties. He also said the bank had continued to require loan repayments even when it was clear he could not afford them, and he believed he should have been able to surrender the company’s assets to the bank to extinguish his debt. When he and the bank were unable to resolve their differences, he asked us to investigate.

Our investigation

The bank’s documentation showed it had approved the loan in a timely manner, despite the application’s complexity, which was the result of complications with the security for the lending. We explained to Kenji that these complications also meant the bank was unable to take full security over his assets and could reduce the size of the loan it was prepared to offer. 

The bank’s documents also showed it acted reasonably in its subsequent dealings with Kenji. He may not have been able to afford the loan repayments, but he nonetheless had an obligation to make them, and we found nothing to show the bank had acted wrongly by continuing to deduct loan repayments from a day-to-day company account, thereby putting that account into overdraft. The bank had been accommodating by switching to interest-only repayments, and it had given Kenji opportunities to try to sell the company’s assets before it repossessed them so as to help him recover his financial position. He did not have a right to surrender assets to extinguish his debt, and there was nothing to suggest the bank had led him to believe this was the case.

Outcome

We did not uphold Kenji’s complaint.