Thomas managed the loans for a while but then stopped making home loan repayments, prompting the bank in November 2023 to issue a notice under the Property Law Act 2007 formally declaring that he was in default on his home loan. The following month, the joint loan exceeded its limit because neither Ellie nor Thomas was making any repayments towards it. 

Ellie was shocked to learn a few months later about the formal notice issued to Thomas. She asked the bank for information about Thomas’ home loan, but the bank refused to provide it on privacy grounds. She asked to take over his loan, but the bank also refused. Ellie complained to the bank that she was entitled to information about Thomas’ loan and the bank was not working with her to resolve her financial difficulties.

Our investigation

We did not agree that Ellie was entitled to information about Thomas’ home loan or that she should be allowed to take it over. The Privacy Act 2020 meant the bank could not share Thomas’ information without his permission. The fact that Ellie had put a caveat over the home did not entitle her to access Thomas’ information. Furthermore, Thomas owned the home, and he was unwilling to transfer the property title to her. Since she did not legally own the home, she could not borrow money against it, including by taking over Thomas’ home loan. Indeed, a bank cannot usually change the names on a loan and a new loan in Ellie’s name would need to repay the existing loan in Thomas’ name.

However, we identified five service failings on the bank’s part. Firstly, it failed to respond appropriately when Ellie said she was the victim of financial abuse. The bank had numerous resources available to help Ellie, but it did not direct her attention to these. Secondly, it failed to treat her in a reasonable and ethical manner when the pair breached the joint loan agreement. It did not attempt to contact her when the loan went over its limit and did not explain its process for customers having difficulty repaying loans. When she asked for help and information, the bank did not respond to her requests because it thought she should know the answers to her questions already. Thirdly, it wrongly changed her address when Thomas updated his address with the bank. Fourthly, it failed to send her or Thomas notices with information about financial mentoring services when they exceeded the limit on their joint loan. And fifthly, it had added more than $10,000 in legal fees relating to Thomas’ home loan to their joint loan, when in fact it was entitled only to pass on those costs to the person giving security for the home loan – that is, to Thomas.

We recommended the bank write off the legal fees, pay Ellie $2,000 compensation for stress and inconvenience, and pay statutory damages for breaching consumer credit legislation.

Outcome

The bank accepted our recommendation, but Ellie did not on the grounds that it failed to take sufficient account of the impact of Thomas’ actions on her. We told her we could consider only the bank's role and the impact of its action on her, and so we could not award compensation for impacts caused by Thomas. Despite our explanation, she still disagreed with our recommendation.