Amanda went to a mortgage broker in February 2021. She wanted to buy her first home and needed finance to do this.
In March 2021, the broker made an application to a bank, which was declined.
In July 2021, the broker made an application to a different bank, for a different property. The bank declined the loan, saying Amanda did not meet their minimum lending criteria.
Amanda continued to look for a property to buy but eventually decided to end her relationship with the broker in October 2021. Amanda complained to the broker about the service she had received. The broker had not kept in regular contact with her, and Amanda believed the July application was declined because of the broker.
Amanda believed the broker had given the bank incorrect information, and he had failed to disclose relevant information. For example, not all of Amanda’s debts were disclosed to the bank, which they found out about when they did a credit check. Amanda also said the broker did not respond to the bank’s questions about her application.
The broker apologised to Amanda for a breakdown in communications, but he did not agree the loan was declined because of him. He believed Amanda had not given him accurate information to pass on to the bank.
Amanda was not satisfied with the broker’s response and asked FSCL to investigate her complaint.
Dispute
Amanda wanted $100,000 compensation. She said the broker had wasted her time, and it was now more expensive to buy a house. Interest rates and house prices had both increased while the broker had been trying to get a loan approved. Amanda also had to pay rent for longer.
The broker maintained he was not the cause of the declined application.
Review
The losses Amanda complained about did not seem to be direct losses. The fact Amanda had not bought a property, and that it may have become more difficult and more expensive for her to do so, were consequential losses or lost opportunities.
Under our rules, known as our terms of reference, we can only recommend compensation for direct loss (financial loss) and inconvenience (non-financial loss).
We cannot recommend compensation for consequential loss except to the extent that it may be covered by inconvenience (non-financial loss). Lost opportunities may also be covered by inconvenience (non-financial loss).
Resolution
Amanda accepted our view that it appeared the losses she was complaining about were not direct losses.
We encouraged the broker to make an offer to resolve the complaint. Amanda was clearly dissatisfied with the broker’s timeliness and communications with her, and based on the emails we had seen, it seemed likely we would recommend compensation for inconvenience (if we had to decide on the complaint).
The broker was happy to make a goodwill offer to settle the complaint, to recognise delays in his communications with Amanda. The parties eventually agreed on a $2,000 confidential settlement.
Insights for participants
We do not always need to fully investigate a complaint. In cases where the complainant does not have a strong claim for compensation for direct loss, but they may have experienced inconvenience, we may discuss with the parties whether they are prepared to agree on a goodwill payment of compensation to recognise the inconvenience.
The parties may prefer to agree on an amount of compensation, rather than go through the process of a full investigation and having us decide an amount of compensation. This can be a time-consuming process, and a mutually agreed settlement is often the best outcome for both parties.
