A bank has settled with a customer, paying them $43,000, after the Banking Ombudsman determined they provided an unaffordable loan.

On the application the customer had noted they had monthly expenses of $4,860, but the itemised expenses totalled much lower. The bank failed to recognise or investigate the significant differences. The bank provided the customer with the loan.

The customer used the loan to buy an investment property with a friend. The repayments were higher than they could afford, and this resulted in the customer having to take on a second job, miss important family events, and ask family members for financial assistance.

The Ombudsman considered that although the bank was liable for the oversight, the customer also carried a degree of responsibility in accessing the service, and in the information they provided. The bank and customer settled for $43,000 in recognition of the inconvenience and hardship suffered by the customer.

When dealing with banks there are standards, and a code of conduct, that must be followed by the banks. It is important to know what your rights and obligations are, as well as the responsibilities banks have.

If issues arise, it is wise to obtain advice from someone experienced in this area.

Alan Knowsley
Litigation Lawyer