Loan contract allowed bank to change break fee

Categories:

Advice & information, Bank decisions, Lending,

Summary:

Emir had home loans with the bank. In November 2024, the bank gave him 14 days’ notice that it intended changing how it calculated the fee it charged when customers repaid a fixed-rate loan early. Emir complained that this change was unfair and that 14 days’ notice was insufficient because it left him with no way to minimise the impact of the change. Emir also said the notification was misleading because it indicated the new formula was a fairer way to calculate the fee.

Published:

October 2025

Our investigation

We found that Emir's loan contract allowed the bank to change the fee provided it gave 14 days’ notice. The contract had a variation clause that clearly stated the bank could change any term of the contract, including the formula for calculating fees. It also gave Emir the right to quit the contract at any time. The notice period complied with the terms and conditions of the contract and standard bank practice. The letters sent to customers about the change did not claim the new formula would be fairer for customers. We shared our views with Emir.