Matthew and Sabrina complained that the bank’s reporting was inaccurate and misleading, thereby breaching the Credit Reporting Privacy Code 2020. They said this meant that when they sought further lending elsewhere, their applications were either declined or they were offered loans for less than they wanted. This had caused them embarrassment, stress and inconvenience.

Our investigation

The bank argued it had followed industry standards by reporting the original loan amount, as defined in the Retail Credit Association of New Zealand’s Credit Data Reporting industry requirements. It also argued the industry requirements meant it had to report the original loan amount, as agreed at the time of signing the loan contract. It said the reportable credit limit would only change if there was a contractual change to the agreed credit limit. The bank said the reduction in the construction loan’s limit was not a contractual change and therefore did not require updated reporting. However, we considered the terms of approval for the new third loan required a credit limit reduction to the construction loan, and that this was a contractual change to the agreed credit limit. Furthermore, the Retail Credit Association’s industry requirements have no legally binding force and do not override the requirements for data accuracy set out in rule 8 of the Credit Reporting and Privacy Code 2020. The bank’s continued reporting of the original $935,000 limit was therefore inaccurate and misleading, breaching rule 8 of the code, which requires credit information to be accurate, up to date and not misleading.

We also found the bank’s inaccurate reporting affected Matthew and Sabrina’s ability to obtain finance. In April 2023, Sabrina sought a $15,000 interest-free furniture loan but was approved for only $8,500. In October 2024, a car finance company withdrew a no-deposit offer because it considered the couple had little equity in their home, forcing them to unexpectedly have to pay a $5,300 deposit. The inaccurate reporting also meant they missed out on interest-free finance for a ride-on lawnmower. Although they suffered no direct financial loss, they did suffer significant stress and inconvenience, including from delays in receiving a correction letter from the bank. They eventually refinanced with another bank to correct their credit reports.

Outcome

The bank and Matthew and Sabrina accepted our recommendation that the bank pay them $3,000 compensation for inconvenience.