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House finance delays cause stress and additional costs

Judy needed a loan to buy a house. She had recently been discharged from bankruptcy, so was aware her loan application might not be straightforward. In early March, Judy contacted a mortgage adviser for help. Judy said the adviser was confident he would be able to arrange finance, so she signed the sale and purchase agreement.

Judy said that over the following weeks she was in frequent contact with the adviser, and he reassured her that the finance would be available shortly. With the settlement date looming, Judy still did not have a loan offer. Judy asked her lawyer for advice, and he suggested they ask the house seller for an extension of time while she waited for a Land Information Memorandum (LIM). The seller agreed to push the settlement date out for a couple of weeks.

Judy said that she continued to contact the adviser about the finance and he, if he responded, reassured her that he was working hard with potential lenders and remained confident that the finance would be available in time.

Two and a half months after Judy first contacted the lender, and with days to go before settlement, Judy asked another mortgage adviser for help. This mortgage adviser said that while she could arrange finance for Judy, she would have to delay other work and asked Judy to pay a $2,000 urgent application fee. Judy agreed.

Within 48 hours the second mortgage adviser had arranged finance and Judy was able to purchase the property.

However, Judy complained to the first mortgage adviser, saying that his empty promises and delay had caused her to experience considerable stress and also additional costs. Judy asked the mortgage adviser to compensate her for the:

  • $2,000 urgent application fee she had to pay the other adviser
  • legal costs of $2,500
  • stress and inconvenience.

When the mortgage adviser did not respond, Judy contacted FSCL.

We referred the complaint to the adviser’s internal complaints process. The adviser asked Judy for proof of her expenses, which Judy gave him. Unfortunately, the lawyer’s invoice did not itemise the expenses relating to the delay and the mortgage adviser did not describe the $2,000 fee as an ‘urgent’ fee.

The adviser said he had insufficient information on which to make a settlement offer. When the complaint was unable to be resolved within 40 working days, we started our investigation.


Judy said the mortgage adviser had given her very poor service, promising that he was just about to secure finance, but only days out from the final settlement date Judy had no confidence that finance would be available. To resolve the complaint, Judy wanted the adviser to pay her costs and an amount of money as compensation for the stress she had experienced.

The adviser said that the $2,000 fee charged by the second mortgage adviser appeared to be a standard fee and did not relate to processing an urgent application. The adviser also noted that the lawyer’s invoice was for $2,500 and appeared to relate to work that Judy would have required, regardless of any delay.


We asked Judy to clarify the costs she was claiming.

The second mortgage adviser explained that she does not usually charge clients to arrange finance, because she is paid by the bank, but on this occasion, she had charged a $2,000 fee because Judy needed the finance so urgently.

Judy’s lawyer provided a more detailed invoice, showing legal costs of $260 and a further $150 for arranging the LIM.

We then discussed compensation for stress and inconvenience. On the events as described by Judy, we agreed that the experience would have been very stressful. We explained that the most we could ask the mortgage adviser to pay to compensate her for the stress and inconvenience was $2,000. Following this discussion, Judy said she would accept $1,000 as compensation for stress and inconvenience.

We discussed Judy’s proposal with the mortgage adviser, explaining that she would accept $3,310 as compensation for his delay in processing her finance application, and gave him the further information Judy had supplied.

The adviser expressed some dissatisfaction that we appeared to be taking Judy’s side in these negotiations. We explained that we were simply trying to help resolve the complaint, we had not received any information from him, and were not in a position to form a view as to the merits of the complaint.

We explained the alternative was for the adviser to give us his response to Judy’s complaint so that we could formally investigate and decide the complaint on its merits.


The mortgage adviser did not want to take any more time over the complaint and offered $3,310 to resolve the complaint. Judy accepted the offer.

Insights for consumers and participants

Sometimes our role is to simply facilitate a resolution without thoroughly investigating the events and issuing a decision on the merits of a complaint.

Where a participant accepts they could have done a better job and the consumer is able to say what would resolve the complaint for them, we are happy to help these negotiations by giving some indication of what to expect from our process and the likely result of a full investigation.