Insights for consumers
When repaying debt, timing can be as important as the repayment amount. Even small delays or changing payment dates without lender approval can put you in arrears and trigger enforcement action.
Always read your loan agreement carefully to make sure you understand the terms.
If your financial situation changes, get the lender’s approval for any changes to repayment dates or plans.
Loan agreements often allow lenders to charge legal and enforcement costs when repayments are not made as agreed. Any waiver of fees is discretionary and not guaranteed if issues continue.
Jamie thought the Property Law Act had been applied incorrectly
Jamie* complained that, despite having a payment arrangement in place to clear mortgage arrears, his lender incorrectly issued him with an enforcement notice under the Property Law Act 2007 (PLA notice). This is a legal document that a lender serves on a borrower before taking serious enforcement action for a default, such as a mortgagee sale.
Jamie said the PLA notice included payments that were not in default and that the lender acted unfairly by issuing the notice even if repayments were only one or two days late.
Jamie believed he had overpaid the arrears and said the lender was being unreasonable. He explained that his business cashflow made the loan payment date difficult. He said that the lender would only agree to moving the date if Jamie made an additional monthly repayment.
Jamie also disputed some of the fees applied to his account, saying they were not legitimate.
Jamie was not making payments as planned
The lender had given Jamie spreadsheets showing all repayments, how they were applied, and why arrears remained. They said Jamie was not complying with the repayment plan because he made ad hoc payments and changed his repayment date without agreement.
After Jamie complained to FSCL, he made further repayments and cleared the arrears. However, because he had unilaterally changed his repayment date, he continued to be partially in arrears each month. Jamie said this demonstrated how inflexible the lender was.
Because PLA notices had been issued, Jamie was also charged legal fees associated with the enforcement action.
What was FSCL’s view?
FSCL reviewed all information provided by both parties and confirmed the lender had correctly tracked Jamie’s repayments and arrears. There was no evidence of overpayment. While Jamie did catch up on arrears during the investigation, changing the repayment date without agreement meant he remained in arrears for part of each month.
We asked the lender whether the repayment date could be adjusted to better match Jamie’s business cashflow without requiring an extra payment.
We reviewed the legal fees and confirmed that, under the loan agreement, Jamie was responsible for the lender’s legal costs, including issuing a PLA notice.
Lender offers options to change the repayment date, but Jamie prefers a new fixed-rate
To resolve the ongoing issues, the lender offered Jamie several options to change the repayment date. Jamie was interested in a discounted fixed-rate option for two years that the lender had advertised to existing customers. After considering the options to change the repayment date, and what his monthly repayments might look like if he were able to take up the discounted fixed-rate option, Jamie decided to keep the existing payment date because the new rate would allow him to make smaller monthly repayments.
How was the complaint resolved?
As a gesture of goodwill and to resolve the longstanding dispute, the lender agreed to waive some legal fees. The lender required all other arrears to be paid before Jamie could apply for the fixed-rate offer.
The lender made it clear that Jamie needed to meet all future obligations, including regular repayments and council rates. The lender warned that no further fees or interest would be waived if Jamie fell behind again, noting they had already made concessions during earlier repayment difficulties.
FSCL helped the parties reach a settlement, with the lender waiving some legal fees and Jamie repaying all remaining arrears. This allowed Jamie and the lender to negotiate a fixed-rate loan that made repayments more manageable. Both parties were satisfied with the outcome, and we closed the case.
