The bank told him he could keep his lending with the bank and one loan funding account, but it would close all his other accounts. Wayne’s accounts were in unarranged overdraft, and the bank combined the debts into one account and closed the other accounts. However, a short while later, the bank told Wayne it would close the two remaining accounts as well. Wayne complained that the staff member he had spoken to told him he would be able to keep these accounts.

Our investigation

We found the bank had given Wayne conflicting information about whether it would close the home loan accounts. The bank understandably wanted to prevent the fraudulent use of its accounts, but we considered that closing these two accounts would have had a disproportionate and unfair impact on Wayne. It would, in effect, force the sale of his home. He had not been keeping up to date with his rates payments, and his council had demanded the bank, as mortgagee, pay on his behalf. The bank had done so, debiting the amounts from Wayne’s account, as it was entitled to do. This meant Wayne’s account was in unarranged overdraft. Banks are generally reluctant to lend to someone with a poor recent account history, and this meant Wayne would struggle to refinance his home loan. If he could not secure another home loan, the bank would have to sell Wayne’s home to recover the outstanding loan amount.

In recognition of the stress and inconvenience he had suffered, the bank offered to refund all interest charged on the overdrawn account ($2,886) and pay Wayne $2,000 into an account of his choosing. At our recommendation, the bank also refunded a fee it had charged for legal advice about its decision to close his home loan account ($2,870). These refunds were applied to the new lending the bank had approved.

Outcome

Wayne accepted the bank's offer.