Insights for borrowers
If you have loan repayments set up by direct debit, check your bank statements regularly to confirm payments are being made. Even when a lender makes an error, missed payments under a loan contract may still need to be repaid. If something goes wrong, discuss options that reduce the longer‑term cost of the loan or the impact on day‑to‑day repayments.
Insights for lenders
Where an error affects loan repayments, addressing the issue promptly and acknowledging responsibility, where appropriate, can support constructive discussions. Working with the borrower to identify options that manage the impact of arrears may help achieve a fair and workable outcome.
Car loan direct debits accidentally stopped
Winslow* and his wife were co‑borrowers on a motor vehicle loan they had held with the lender since 2023. Their loan repayments were made by direct debit.
In late 2024, the lender made an administrative error and cancelled Winslow’s direct debit. The loan repayments stopped, and Winslow did not notice that the payments were no longer being deducted from his account. By the time the lender identified the issue and contacted him, the loan was approximately $3,600 in arrears.
Lender offers a solution
The lender acknowledged their error and apologised. They offered to waive fees and interest applied to the arrears, totalling about $1,300, and to set up a payment plan for the remaining missed repayments.
Winslow was not satisfied with this proposal. He considered that, because the arrears arose from the lender’s mistake, the full arrears, including the principal repayments, should be waived, or that a greater concession should be made.
Winslow complained to FSCL.
What was FSCL’s view?
We considered it fair for Winslow and his wife to repay the missed loan repayments. These payments were required under the loan contract, and Winslow and his wife continued to benefit from the loan during the period when repayments were not being made.
At the same time, we considered it appropriate for the lender to take responsibility for their error and to offer a resolution that reduced the financial impact on Winslow and his wife. Waiving all fees and interest charged on the arrears, which the lender had offered, was a helpful starting point for the parties.
We worked with both parties to explore whether there was a resolution that recognised the lender’s mistake while also reflecting Winslow and his wife’s ongoing contractual obligations.
What was the outcome of the case?
With our assistance, Winslow and the lender agreed on a revised resolution. The lender agreed to reduce the interest rate on the loan from 12.95% to 9.95% per annum and to move the missed repayments to the end of the loan term, extending the term rather than requiring higher repayments.
This outcome meant Winslow and his wife did not need to increase their regular repayments to clear the arrears and would pay approximately $1,500 to $2,000 less in interest over the life of the loan.
Winslow accepted this resolution, and the complaint was closed.
