Time taken to assess loan extension reasonable in the circumstances

Concerns about lending decisions,
Laurence’s bank approved an application to buy a residential section in 2019. Three years later, Laurence asked for an extension to the loan so he could build a house on the section. The staff member Laurence tried to contact no longer worked at the bank, and he was eventually put on to the team that had dealt with his first application. However, this team told him it was too busy to process new applications and passed on his application to another team. This second team took a month to gather all the information it needed from Laurence to assess his application. It took another month to assess and conditionally approve the application.
July 2023

Laurence said the bank told him in 2019 that it would be an easy matter to extend his mortgage when he eventually wanted to build, but this was far from the case. Staff had also failed to understand his circumstances, refused to meet him in person, and rejected his request to transfer his application to a different team. The eventual approval was subject to conditions he said were inconsistent with the information he had given the bank. Altogether, the misunderstandings and delays had cost him between $80,000 and $100,000 in increased building, lending and living costs.

Our investigation

Our terms of reference, or rules, do not allow us to consider a bank's decision to lend or not lend to someone, but we could consider whether Lawrence’s bank gathered information and assessed his application correctly. We found the delays in gathering information were not the bank's responsibility, although we also found the bank took a significant amount of time to assess his application, which could be explained, in part, by the complex nature of Laurence’s financial affairs. In the circumstances, however, the time taken to assess the application was reasonable. In addition, the bank was under no obligation to meet Lawrence face-to-face, and the decision about which team would assess his application was one for the bank alone to make.

The conditions attached to the approval were not, in our view, clearly communicated, although the bank put this right in subsequent communication with Lawrence. The end result was that he suffered no financial impact or significant inconvenience.


We did not uphold Laurence’s complaint.

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