Bank not upfront about reasons for declining request to open accounts

Lending restrictions,
Fletcher applied to be a new customer at the bank. He explained to a branch staff member that he had an account at another bank but was unhappy with how it was treating him. He said he had a debt repayment order for a $30,000 debt. He explained he had incurred the debt because of a previous gambling addiction.
October 2022

He supplied a copy of the order and his pay slips and explained that he was completing a certificate in money management at his local wananga. He confirmed his income and accommodation supplement would be deposited to an account at the bank and said he wanted a basic savings account and a transactional account with a debit Mastercard so he could make online purchases. Three days later, the bank told him it had declined his request. When he asked why, he was referred to the branch manager who told him that the bank did not have to open an account for him and that she had decided he did not need one. Unhappy with this response, Fletcher complained to the bank. The bank wrote explaining that after reviewing a number of factors it had decided that it did not have the risk appetite to offer him an account.  Fletcher remained unsatisfied. He believed the bank was not being honest about the real reason it had declined his request and asked us to investigate.

Our investigation

Banks are free to decide whether to take on a particular person as a customer, although it is best practice – but not obligatory – to give a reason when turning down an applicant. Any reasons should be accurate and communicated clearly. In reviewing Fletcher's application form and the call with the branch manager, we had concerns about the bank’s communication to him.  The branch manager told Fletcher he gave no purpose for wanting an account. This was incorrect. The application form and accompanying information contained detailed reasons about why he wanted accounts at the bank and what their purpose would be. Nor was the bank’s response to his complaint consistent with this explanation.  It referred to the bank’s risk appetite, not a lack of purpose for the account.  We could appreciate Fletcher's frustration at the bank’s communication.


We shared our concerns with the bank.  It apologised to Fletcher and offered him compensation of $500. He accepted the offer.

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