Bank acted reasonably in reaching decision to decline loan application

Lending restrictions,
In early 2020, Oliver and his wife took out a home loan from the bank but separated soon afterwards. The bank initially froze their joint accounts, including the loan account, and the pair made no loan repayments for several weeks.
October 2022

Oliver's wife then took over full loan repayments for about 18 months, during which time she sometimes fell behind with repayments but always cleared the arrears. At this point, Oliver took over the repayments. He also applied for a loan to buy his wife out of the family home. The bank declined the application, saying he had a history of arrears, as well as a default against his personal name for an unpaid credit card debt.

Oliver complained that the bank had failed to tell him about the arrears while his former wife was repaying the home loan. He said the bank was responsible for the fact he could not get a loan to buy out his former wife, and he asked the bank to review its decision. The bank stuck by its decision, and he complained to us. 

Our investigation

Banks are not obliged to lend to customers. Rather, they exercise their commercial judgement when making lending decisions. We could not therefore make the bank lend to Oliver. However, we could consider whether the bank had acted reasonably in relation to his existing lending, and we found that it had. His credit card payments, and the couple’s loan repayments, had not been made when due, and the bank had advised him of this fact by phone and through account statements. Early on, Oliver had told the bank he was a stay-at-home dad and couldn’t make any payments and asked the bank to speak to his wife about arrears. The bank – quite properly – warned him he was still liable for the debt and arrears. The bank was obliged to give credit reporters information about his repayment history and had told him it would be doing so. It also properly told him a default would be registered against his name if he did not pay his credit card debt.


We did not uphold Oliver's complaint.

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