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The importance of plain language

As part of the loan approval process, Jenny accepted an authority given to her by her lender allowing it access to her bank account information, directly from her bank. The loan was approved, and Jenny started repaying the loan. Unfortunately, Jenny’s health deteriorated, and she had to stop work. Jenny asked her lender for hardship relief. Jenny’s lender asked Jenny for her bank statements, and when Jenny failed to provide them, the lender contacted Jenny’s bank directly.


Jenny received a message from her bank saying an unauthorised person had accessed her account. Jenny panicked and changed all her bank account details. Later that day Jenny’s lender contacted her and said that, with the information it had obtained directly from the bank, the hardship application had been approved.


Jenny was very upset that her lender had accessed her bank account. The lender said it had not done anything wrong, referring to the authority Jenny had agreed to when she applied for the loan.


Jenny thought the authority only gave the lender permission to access her bank records as part of the loan application process and said she would never have agreed to such a far-reaching authority. Jenny referred her complaint to FSCL.


We referred Jenny’s complaint to the lender’s internal complaints process. The lender again explained that it was acting within the agreement, said that it had not meant to cause Jenny any distress, had accessed the information to speed the hardship application process up, and offered to write off Jenny’s debt of about $250.



Jenny did not accept the $250 debt write-off, saying that the lender still did not appreciate that it had acted illegally.


The lender reiterated that Jenny had agreed to it keeping her bank account access details and allowing it to use them in the future if it needed to. The lender considered its settlement offer was reasonable.



We reviewed the terms and conditions Jenny accepted when applying for the loan, and agreed the authority she had signed allowed the lender to access Jenny’s bank account in the circumstances of her case. However, we could see why Jenny did not understand that this is what she had agreed to. The document was overly complicated and difficult to understand.


We told the lender we considered it had breached its responsible lending obligations under section 9C(3)(b) of the Credit Contracts and Consumer Finance Act 2003 because it had failed to help Jenny make an informed decision and understand the implications of signing the authority.


We were also concerned that some provisions in the authority may breach the unfair contract terms provisions in the Fair Trading Amendment Act 2013.


The lender agreed that the document was difficult to understand and undertook to make the changes to make its terms and conditions much easier to understand.



We explained to Jenny that while the authority allowed the lender to access her bank account information, we could understand why she did not appreciate this. We could see that Jenny was shocked and distressed to hear from her bank that her account had been accessed without her authority. While the stress would have been extreme, it was relatively short-lived. We could also see a benefit to Jenny, in that the access enabled the lender to make a quick decision and provide immediate hardship relief.


We found that the lender’s offer was a reasonable offer in the circumstances.


Insights for participants

Responsible lending extends beyond determining whether the lending is affordable and assessing hardship applications. Responsible lenders are obliged to provide information in plain language, in a clear, concise and intelligible manner.