Our investigation

We found the bank had assessed Ester’s ability to afford her two loans and Oakley’s ability to afford his loans (as well as lending advanced to Oakley’s company and family trust) as a group but had made them individually responsible for repaying their separate loans. Ester and Oakley had requested this arrangement. We found the bank did not meet its obligations to ensure Ester could afford the loans provided to her individually. We assessed her financial position and found that even on her individual financial position, the loans were affordable. We also found the bank made an error when it set the repayment period for the $93,000 loan at eight years. However, Ester did not query the high repayments or seek hardship assistance. We also found the bank erred in failing to refix the $80,000 loan. In addition, we found Ester could not claim the loss from the sale of her investment property because the loss was not a direct consequence of a bank error. We concluded she was entitled to a small interest refund and a small refund on the early repayment adjustment fee. Together, this added up to $530. Finally, we found Ester was entitled to compensation for the stress and inconvenience caused by the bank’s failure to set the correct repayment period for the $93,000 loan, and its errors associated with refixing the loan. The bank offered $6,500 compensation for direct financial loss and inconvenience.

Outcome

We issued a decision endorsing the bank's offer as fair and reasonable. Ester did not accept the offer or our decision.