Bank did not suggest loan would be interest only

Concerns about lending decisions, Privacy & confidentiality,
Stefan obtained lending to buy land and build a property. He complained that the bank did not follow his instructions about how to structure the lending. He said the bank had agreed to two interest-only loans on a fixed interest rate, and a loan on a floating rate. What he discovered days before settlement was that the bank had set up a single loan on a floating rate with principal and interest repayments. He decided to sign the loan documentation as it stood so he could settle on the arranged day and fix things up afterwards. The bank told him he would have to complete a new loan application if he wanted interest only lending, but it later agreed to restructure the lending in the way he had asked, to resolve his complaint. However, Stefan would not agree to the loan terms the bank offered, because he thought the fixed price contract condition on the construction loan was unfair.
October 2021

Stefan also complained that the bank had breached his privacy by telling a staff member he knew personally about his complaint, contrary to his instruction, and it had put him on speakerphone without his knowledge or consent. Finally, he said the bank had called his integrity into question on several occasions.

Our investigation

Bank records showed the bank had confirmed in writing with Stefan on 2 November 2020 that the lending would be for principal and interest. Records also appeared to show that Stefan had come back asking for interest-only terms, but the bank had declined the request. We could find no evidence that the bank had led Stefan to believe it had approved interest-only terms.

As for contacting the staff member Stefan knew, we considered the bank had acted reasonably in doing so because Stefan had been in contact with this person throughout the loan process. Given his history of dissatisfaction with previous staff, the bank also wanted to find out from that staff member which construction coach should manage Stefan’s building loan. We didn’t therefore think the contact was inappropriate or a breach of privacy.

 We agreed the bank should have told him it was putting him on speakerphone. However, it had to tell the person listening in about the contents of the conversation anyway, so we could not see how this had caused Stefan any harm.

 Lastly, we agreed that the bank had acted inappropriately in questioning Stefan's integrity. We suggested the bank apologise to Stefan.


The bank apologised to Stefan.   

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