Junior asked the bank to refix all the terms at 60 months and repay any difference in interest. The bank refused, saying staff could provide general guidance on terms but were not able to give advice on what structure, rates or terms a customer should select. Junior complained to the bank about its decision, and said he was also dissatisfied with how long it took to respond to his complaint. 

Our investigation 

The bank kept no notes or records of phone calls that would explain why it structured the loans as it did in 2020. It said a staff member would typically provide general guidance about how staggering loans over different terms could lessen the risk of interest rate changes and also allow for the sale of a property without incurring early repayment adjustment fees. However, it emphasised that it did not provide advice to customers in such situations. It was up to customers to decide the terms of their loan. It said it was therefore likely that the staff member concerned had explained to Junior that staggering lending over different terms might be a useful strategy. This was not misleading or incorrect information. We considered there was no incentive or reason for the bank to tell a customer that he or she could not choose any particular length of fixed-rate term and (with no independent evidence) we could not say the bank misled Junior or provided incorrect information.

However, we found the bank failed to respond to his complaint within a reasonable time, and should pay $500 compensation for the inconvenience caused by the bank’s delay.

Outcome 

Junior did not accept the recommended compensation.