Customer knew the risks of inflating his income to obtain lending

Concerns about lending decisions,
In early 2021, Vince wanted to buy another investment property and said a bank staff member suggested in a phone call that, to meet the higher repayments, he could say he was taking in a boarder and provide a rental agreement showing inflated rent of $680 a week. Vince said he had no intention of taking in a boarder or to charge rent of that amount, but he was desperate to buy another investment property. He therefore followed the staff member's suggestion and submitted fake rental and boarder agreements.
October 2023

Vince’s application was approved, and he bought a rental property, fixing his interest rate for two years. Shortly before his fixed interest rate agreement was due to expire, he contacted the bank and said he could not afford repayments on the new higher interest rate, and complained it was the bank's fault he was in this position. He said the lending was not affordable and would not have been approved in the first place but for the fake agreements the bank had advised him to provide. He asked the bank to give him a favourable rate to help him out. The bank reviewed his application and did not agree it had suggested he lie in order to have his lending application approved. It also did not agree to give him a favourable rate. Vince was not satisfied with this response and asked us to investigate.

Our investigation

We obtained all the information held by the bank and Vince about the loan application, although not a recording of the alleged phone call, and could find nothing to back up Vince’s allegation. Rather, the correspondence between Vince and the bank made clear that, well before making his application in 2021, he had been actively advising the bank about various boarder and rental arrangements he was considering. Also, in providing the rental and boarder agreements, he had signed declarations that he understood that the income from the agreements would be included in the bank's assessment of whether he could afford a loan. There was nothing to suggest the bank could not rely on the agreements. We also considered whether it would have been reasonable for Vince to have relied on the advice allegedly given by the staff member, and we concluded it would not have been. His correspondence with the bank showed he clearly understood that his ability to service the loan would depend on the actual income he received – which had not changed – as well as applicable interest rates.


We did not uphold Vince’s complaint.

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