Compensation for delay in progressing a loan application

In May 2021, Fetu met with a mortgage adviser about getting a loan to purchase a house. He wanted to apply jointly with his daughter and her partner. The adviser looked into whether he could assist, but found Fetu would not meet bank lending criteria. He gave Fetu some advice about how to improve his position so he could apply at a later time.

In July 2022, Fetu met with the adviser again. This time, he wanted to get a loan jointly with his son and daughter. The adviser gave Fetu application forms to complete and asked for information such as bank statements and proof of income.

Fetu provided all the information the adviser asked for, and then waited for a response. The adviser got in touch to request some further information on one occasion, but other than that Fetu did not hear anything back. He tried to follow up, but still did not get a response. After a month, Fetu raised a complaint. The adviser then got back in touch with an update, but Fetu decided not to proceed and looked for a new adviser instead.

The adviser apologised to Fetu but could not resolve his complaint. Fetu then asked FSCL to investigate.


The key issue in Fetu’s complaint was whether the adviser had provided an appropriate level of service. In particular, there was a dispute about whether the adviser had caused unreasonable delays.

Fetu said the fact that nothing had happened with his application for a month meant he and his family had lost the opportunity to buy a property with a 10% deposit. He wanted $80,000 compensation for the lost opportunity to buy a property. He also said the poor service had caused him significant stress, including needing to take time off work. To recognise this, he wanted a further $10,000 compensation.

The adviser disputed some of the details in Fetu’s complaint. He explained he had been off work with health problems but said his team had been in constant contact with Fetu. He also said there were issues with the documents Fetu provided, and this meant some of the delay was outside his control.


We reviewed the correspondence between Fetu and the adviser and concluded there were unreasonable delays in progressing the application. Although the adviser said his team were in constant touch with Fetu, there was little evidence to support this. Instead, there was a lack of contact after Fetu submitted the information the adviser asked for. We also noted the adviser’s system notes supported the view that it was him rather than Fetu that had caused the delays.

We acknowledged that the adviser had been unwell, and that the period in which he was dealing with Fetu’s application had been a difficult time for him. Based on this, we did not think he had deliberately delayed dealing with the application. But there was nothing to show he had explained the situation to Fetu, and this denied Fetu the opportunity to make an informed decision about what to do next. For example, Fetu could have sought help from another adviser sooner if he had known there would be delays.

Although we found the adviser had not provided an appropriate level of service, we explained to Fetu at an early stage that we could not award the amount of compensation he was seeking. This was because both the lost opportunity to purchase a house and the stress he experienced are what we call non-financial losses. Under our rules, the most FSCL can award for non-financial loss is $5,000.

In assessing a fair outcome, we started by considering the claim for lost opportunity. There was no evidence Fetu had made the adviser aware he had a short deadline to purchase the property. We also found there was not enough evidence to allow us to conclude Fetu would have been able to purchase the property in question if the adviser had dealt with his application more promptly. For these reasons, we decided compensation for the lost opportunity was not warranted.

We then considered Fetu’s request for compensation for stress and having to take time off work. Fetu provided medical evidence that he said supported his claim, but we found this showed the reason he had to take time off work was unrelated to his complaint. In the absence of evidence showing a significant level of stress, we decided the impact in this case was at the lower end of the scale. We concluded it would have been frustrating and somewhat stressful for Fetu that the adviser delayed his application, but that $500 was a fair amount of compensation to recognise this.


Both Fetu and the adviser accepted our decision, and the complaint was resolved with the payment of $500 compensation.

Insights for advisers

This case shows the importance of good communication with clients. The adviser had gone through a difficult time with his own health, but the fact he did not update Fetu about his application meant he did not know what was happening and became frustrated.

This dispute escalated quickly, and Fetu was asking for high levels of compensation that we ultimately found were not justified. But we think the adviser contributed to this escalation by not acknowledging there were delays sooner. His claim that his team were in constant touch with Fetu was not supported by evidence, such as file records, and only served to frustrate Fetu further.