Two pieces of legislation deal with Council rates:
- The Local Government (Rating) Act 2002, obliges property owners to pay their rates. It also enables the council to recover unpaid rates from the bank as mortgagee if the property owner is in default.
- The Property Law Act 2007, also obliges the borrower in a mortgage to pay rates for the property.
A council can notify a bank, as mortgagee, that a property owner has not paid his or her rates, and demand that the bank pay them instead. The bank must pay the arrears. Typically, it will recover the money from the customer by debiting the amount to his or her account. It is standard practice for the terms and conditions of property loans to include a reference to a bank's right to recover money owed by customers.
Customer did not authorise the debit
Some customers complain that their bank acted unlawfully by taking money from their account because they did not authorise the withdrawal. In such cases, we will review correspondence between the council and bank, and between the bank and customer. We will also check whether the terms and conditions of the customer’s account allowed the bank to debit the account in such circumstances. If the terms and conditions contain such a provision, and if the bank paid the rates arrears in response to a council demand, we cannot take the complaint further.
Bank failed to notify the customer
Customers complain that their bank failed to notify them of its intention to debit their account. It is standard practice for a bank to try to contact a customer to advise that it has received a rates notice from a council, and also to explain the consequences of a rates demand being served on the bank. We review communications to check that the bank gave adequate notice. If we find the bank failed to give adequate notice, we may consider compensation for inconvenience.
Customer in a dispute with council
Customers complain that their bank should not pay rates arrears or debit their account because they are in a dispute with their council. Banks are not required to become involved in such disputes, and are entitled to rely on a council’s notice that rates are in arrears. The courts are the place for ratepayer challenges.
It is standard practice for a bank to try contact a customer to advise that it has received a rates notice from a council and explain the consequences of the demand before debiting your account.
Repayment plan contained obligations for bank and customer
Sam fell into arrears with her home loan repayments. The bank asked her to sign a repayment agreement confirming her own proposal to continue making repayments, along with paying an extra $250 a week in arrears. Sam failed to meet the terms of the agreement, and the bank began recovery action.CASE 2
Bank procedurally correct over rates arrears
Zhang owned a property over which his bank had a mortgage. He could not pay his rates because of financial difficulties. The council wrote to him for several months about the overdue rates before advising his bank that it might issue it with a payment demand.CASE 3
Bank failed to answer question about how to block rates demand
Jordan stopped paying his rates because of a dispute with his local council. Jordan had repaid his bank loans on the property, although he had not instructed the bank to discharge the mortgage, with the result that the title still showed the bank held a mortgage over the property.
Privacy & confidentiality
Banks have a legal duty to protect the confidentiality of existing and former customers. Banks also have obligations under the Privacy Act 2020, which contains 13 privacy principles about personal information. In the banking sector, these principles govern:
banks’ collection and storage of customer information
customers’ rights to access and correct information about themselves
the disclosure of …
Common scams targeting bank customers
You always need to be on your guard when it comes to banking and money matters. That doesn’t mean being suspicious or paranoid. Rather, it means exercising care and maintaining a healthy scepticism towards individuals or companies when you’re online. We recommend you take the following precautions:
How to bank safelyFind out something about the company or individual you are dealing with. Do an in…
Financial abuse of the elderly
Financial abuse can take the form of:
misusing or stealing from the bank accounts of those in their care
pressuring a person to sign a legal document, such as a guarantee or mortgage
using a power of attorney in a way that is not in the interests of the person who granted it.
Pressure from family member or caregiverElderly people may face pressure from family members for financial support. For ex…