Couple not misled over loan application to buy farm

Concerns about lending decisions,
Michael and Melissa leased a farm but wanted to buy their own farm. In 2020 the couple approached the bank to discuss a proposal to buy a farm, which the bank indicated would be possible with a 50 per cent deposit, a strong budget and a reduction in their overdraft.

They then entered into an agreement to buy a farm. To come up with the deposit, they sold the lifestyle property they owned, as well as some livestock. However, when they presented their budget to the bank, the bank did not consider it sufficiently sound and also expressed concern about their failure to stick to budgets in the past.
June 2022

The couple complained that the bank had misled them about the status of their loan application. They believed the bank had approved their lending, subject only to providing some further information. They were therefore surprised when the bank declined their application, especially when the bank made reference to information it had known about from the start. They also said the bank had failed to document and communicate the requirements for obtaining a loan, leading them to believe they needed to sell assets to ensure their application went through.

Our investigation

We reviewed the communication between the couple and the bank, but were unable to find any information to show the bank had led them to believe the loan would be approved or that they needed to sell assets to progress the loan application. The bank had been clear from the outset that the budget needed to be acceptable to the bank, but the budget was not provided until late in the piece. Until that point, the bank was not in a position to make a full assessment of the loan application. The bank could have documented and communicated its requirements better, but the couple knew what the core requirements were, and so could not legitimately argue they had been misled.


We could not uphold the couple’s complaint.

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