Investing,

In 2018, Florence withdrew funds from an investment company to put towards the purchase of a property. She used a home loan to make up the difference. In 2021, aged 66 and looking to retire, she met an investment adviser linked to her work, who explained how she could borrow money from the bank and invest it. The record of the meeting said she was fit and well and expected to work until her late 70s. It also said Florence had received advice about some of the benefits of borrowing to invest. A broker submitted an application to the bank on Florence's behalf seeking a 15-year loan of $400,000 to repay about $220,000 owing on her home loan and credit cards and to put the balance with an investment company. The bank approved the application, subject to conditions, including that Florence obtain independent investment advice, and that she provide a mortgage over her property as security for the lending. Florence then combined the balance of her lending with her own savings and invested about $460,000 in the investment company. However, in late 2022, Florence became concerned about her investment, which had suffered losses and was not performing as she had expected. The fact the adviser was linked to her work had resulted in tensions in her workplace leading her to quit her job. When the bank learned she had left her job, it gave her a repayment holiday while she withdrew from her investment and repaid most of her lending. Florence complained to the bank that it should not have lent her money for investment purposes, given her age and the risky nature of borrowing to invest. She asked the bank to compensate her for the $140,000 she lost on her investment. The bank did not agree with Florence, and she asked us to investigate.

September 2024