Bank took too long to invest EQC funds

Categories:
Investing
Summary:
Satine complained that the bank received an earthquake commission payment on her behalf of $130,000 but failed to place it on term deposit until two months later.

Satine also raised a number of issues about the way her loans had been managed in 2008. We found these issues to be outside of our jurisdiction, based on timeframes.

Our investigation

Our investigation showed that while the bank was aware that the EQC payment had been received, it took too long to apply the funds. Three different areas of the bank were in communication, including the bank’s credit team. This team was required to decide if the funds should be applied to the loan or placed on term deposit. The bank also said it asked Satine for information about the repair needed and whether her insurer was also involved.

We found that the bank should have placed the funds on term deposit (or applied them to the loan) at the time they were received.

The bank offered to pay Satine the interest she would have earned, less any resident withholding tax (RWT) she would have had to pay. We said the bank should pay her gross interest, unless it was intending to make the RWT deduction. After some discussion, the bank agreed to increase its offer to cover gross interest.

We provided a preliminary view which contained the bank’s offer of gross interest and some compensation for inconvenience. The preliminary view also dealt with the jurisdictional issues raised by the loan management issues from 2008.

Outcome

Satine chose not to accept the bank’s offer, and we closed our file.

Print this page