Bank acted correctly in referring debt to collection agency

Retaining personal information,
Lucien’s bank account became overdrawn by $1,000 in 2023. Lucien lived in Australia but had not updated his contact details with his New Zealand bank. The bank sent letters to his last known address asking him to clear the overdraft, adding that, if he did not, it could refer the debt to a collection agency and list the debt as a default with credit reporting agencies. This last step, it pointed out, might affect his ability to get credit in future.
November 2023

The bank sent a final demand for payment in July 2023, reminding him of the consequences if he did not repay the $1,000 within 14 days. The bank also tried four times to contact him on his last known phone number before referring the debt to a collection agency in September. Lucien complained to us that the bank had not given him sufficient notice of its intention to lodge the debt as a default and that he could no longer obtain credit in Australia. Lucien said he had visited a branch of the bank in Australia and passed on his new contact details.

Our investigation

We explained to Lucien that we expect banks to contact customers at their last known address and tell them clearly what steps they can take if a debt remains unpaid, including referring it to a collections agency and notifying credit rating agencies, and also what the consequences may be of taking such steps, including difficulty in obtaining credit in the future. Having reviewed the correspondence between the bank and Lucien, we were satisfied the bank had met its obligations in this regard and acted in line with the terms and conditions of his account. Also, Lucien had a responsibility to update his contact details with the bank.  


We did not uphold Lucien’s complaint.

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