Business owner had no basis for expecting special interest rates

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Business owner had no basis for expecting special interest rates

Categories:

Concerns about lending decisions,

Summary:

Luka owned a well-established business that had been operating for more than15 years and had been a customer of the bank from its inception. The company had loans with the bank secured by a mortgage over a block of property where Luka had his home and business. In 2022, Luka complained to the bank about the interest rates on the company’s loans, saying the rates were unfair given the security offered and the company's longstanding relationship with the bank.

Published:

December 2024

Luka said a 2019 valuation made clear the property was residential and that the bank should have applied home loan rates to the company's loans. Luka also said the business hosted bank functions on the understanding the bank would provide the best possible loan rates and said it later promised to provide Luka with the best possible rates after the business was badly affected by the COVID-19 pandemic. Luka said the company was overcharged interest and sought compensation from the bank.

Our investigation

We do not have the power to consider complaints about a bank’s interest rates. However, we can consider a complaint that a bank misled a customer about the interest rate applicable to a loan or made an error with it. In Luka’s case, we did not find the bank made any such misrepresentations or errors. There was also nothing to suggest the bank had agreed to give the company special rates in return for hosting bank functions. Finally, we did not agree Luka’s lending should have been treated as residential lending.