Our investigation

We reviewed Bradley's loan agreement and found the bank had a right to transfer Bradley's loan to a new lender. However, the bank still had to act fairly and reasonably towards its customers when exercising its contractual rights. Bradley’s low-equity status meant he could not refinance on similar terms to those he agreed to with his bank, but the bank was not responsible for this situation. The change in the property market had caused the value of his property to drop – something entirely outside the bank's control.

Bradley argued it was unfair for the bank to transfer his loan to a new lender charging higher interest rates. We did not accept this argument. Banks have broad commercial discretion to set their own interest rates. Bradley's bank had historically offered competitive rates, but Bradley had no guarantee the bank's rates would always remain competitive. It would not have been unfair or unreasonable for the bank to increase the rate on Bradley’s loan, so it was not unfair or unreasonable for the bank to transfer his loan to another lender charging higher rates.

Outcome

Bradley's bank offered to pay Bradley $1,000 to help with his refinancing costs, an offer he accepted.