Insights for participants
Communication sits at the heart of many complaints. If the lender had contacted Gina early and explained what was happening with her payments, then communicated clearly when a payment went missing, and finally given her advisers the information they needed, this complaint would have been avoided entirely.
What happened?
When Gina first got a home loan, she completed a direct debit authority allowing her lender to deduct her loan payments from her bank account. Gina found the direct debit payment frequency did not align with her income cycle, so Gina started repaying the loan manually.
Gina didn’t tell her lender that she was changing the way she was making the payments, so the lender kept trying to debit her account. Gina always made the payments on time, but there was a delay in the money reaching her account if the payment was due on a weekend. Gina received repeated messages from her lender letting her know there was a problem with her payments but not explaining what she should do to fix it. Gina found these messages stressful, because from her perspective she was making the payments on time.
In early October 2024 the lender contacted Gina because her account was in arrears. Gina said that she had made the September payment. Gina gave the lender a screenshot of her bank account and the lender realised Gina had entered the wrong suffix and the payment had not reached her account. The lender said they would investigate and get back to her.
When Gina did not hear from the lender after a couple of weeks, she contacted her mortgage adviser who contacted the lender. During this time Gina felt ignored and was really worried about where $9,300 of her payments had gone.
A couple of weeks later the lender finally told the adviser they had found the money, applied it to the account, and refunded the additional interest.
As a result of these experiences Gina decided to refinance her loan with another lender, but because she had a fixed interest rate loan, there was going to be an early repayment cost. A couple of weeks before settlement her adviser asked for an indicative quote. At the beginning of settlement week, the lawyer asked for an indicative quote.
On settlement day, a Friday, the lender said Gina would need to pay an additional $32,000 as an early repayment cost. The amount came as a complete shock and Gina was very worried she would not be able to refinance. On the Monday Gina’s lawyer and adviser were able to arrange for Gina to borrow the additional $32,000.
What were the parties’ views?
Gina complained about:
- the way the lender managed her account when she was making manual payments
- that the lender had taken ages to find her money when she used the wrong suffix
- the lender’s delay in telling her what the early repayment cost would be when refinancing.
The lender offered Gina $500 as a goodwill gesture. Gina said that was not enough and that her adviser suggested $16,000 would be more reasonable – being half the early repayment cost.
The lender did not accept they had caused Gina’s stress and declined to increase the offer.
What was FSCL’s view?
We discovered that the lender had located the missing money but did not tell Gina or her adviser until a week later. Gina would have been very stressed while she was waiting for the lender to find her money. Gina’s stress was compounded when she discovered on settlement day that she would need to find an additional $32,000 to refinance her lending. If her lender had given indicative quotes earlier, she would have been able to arrange the finance ahead of settlement day, avoiding additional stress.
How did FSCL suggest that the complaint should be resolved?
We decided that the $500 already paid to Gina was not enough to recognise her level of stress over two events. The first event caused moderate stress over an unnecessarily long period of time. The second event caused Gina a very high level of stress over a relatively short period of time. We suggested the lender offer $1,500, being a total of $2,000 for both events.
Both Gina and the lender accepted our view that a further $1,500 would be fair. We closed our file.
