Credit card limit increases: Ellen was not working but was receiving payments from the Accident Compensation Corporation when the bank gave her a pre-approved offer to increase her credit card limit from $9,500 to $14,000, and then to $24,500. Her net income at the time was $27,000 a year.

Home lending: Ellen and Logan did not want their bank accounts to keep overdrawing beyond their limits. They said Ellen had asked the bank to stop this from happening. Also, the bank’s app showed incorrect information about what funds were available, which meant they thought they had more funds available than they did. As a result, Ellen ended up with an adverse credit rating and the couple’s home loan application was declined. Logan also said they were misled into believing they had pre-approved home lending from their bank and incurred expenses, including a builder’s report, when they signed a contract on that basis. They then had to withdraw their offer and ended up missing out on their dream home.

Bank statements: Logan needed bank statements for a court case, but the bank did not provide them. As a result, he was forced to settle the case for a substantially lower sum than claimed.

Our investigation

Credit card limit increases: We considered the bank breached its responsible lending obligations by increasing Ellen’s credit limits. It did not assess whether she could afford the increased credit limits. She was using a third of her income to meet the minimum monthly repayments. This caused her to suffer great financial and other stress. The bank argued the Credit Contracts and Consumer Finance Act 2003 did not require it to check whether credit card limit increases were affordable. We did not accept its position. We said that having regard to both the Act and the Code of Banking Practice, the bank is obliged to check that a credit limit increase is affordable for a customer.

We said the bank should refund Ellen $9,000 for fees, interest and credit card repayment insurance premiums charged on the increased credit limits, along with $3,000 compensation for inconvenience.

Home lending: Ellen had asked for the shadow limit to be removed from her personal account. However, we found no evidence that she had asked the bank to do so on their joint account. The bank’s money app did contain some confusing information, but the available balance figure was correct.

There was no information that showed the bank misled the couple into thinking they had pre-approved home finance. The bank declined their loan application for several reasons including a high loan-to-value ratio, and outstanding debts, and not solely because of the information on Ellen’s credit file.

Bank statements: We found the bank had an obligation to give Logan the statements when he asked for them. It breached that obligation by failing to honour his request. However, the amount he lost in the court case was speculative. We could not award any money on that basis, although we did recommend $1,000 compensation for inconvenience for failing to provide statements to Logan when requested.

Outcome

Ellen and Logan accepted our recommendations.