The average reported loss rose from $80,000 last year to $88,000 this year.
Complaints related to property lending remained significant, ombudsman Nicola Sladden said. “Many were about interest rates and break fees.”
In one case dealt with in the year, a man injured his back and couldn’t work, making it hard for him to make his home loan repayments.
The bank sent him a formal letter of demand to clear the arrears.
He paid the money and then asked about switching to a fixed-rate loan, which would lower his payments.
The bank said it would monitor the repayments for 90 days before it considered the request.
He argued he had previously been told that he could not apply for a fixed rate only when he was actually in arrears.
He said that had he known this, he would have put the money into renovating his home for a voluntary sale, rather than the forced sale the bank had mentioned.
The ombudsman’s case note said he got in touch with the bank several times before eventually losing his temper and becoming abusive to staff.
The bank told him it would close his accounts.
He complained to the ombudsman scheme that he had been treated unfairly.
“Given [his] language and tone, the bank’s decision to close his accounts was reasonable. However, [his] history of arrears meant he would have difficulty finding another bank for his home loan, so we suggested the bank offer to put $4000 towards renovating [his] home in preparation for its sale, with any leftover money going towards his arrears,” the case note said.
The bank also offered to make a payment of $500 and allowed him to make a small weekly payment to slow his growing arrears. The man accepted the offer.
Sladden said it highlighted the importance of communication when customers got into difficulties.
“Even though most banks have specialist hardship teams to deal with such customers, there are still opportunities for them to improve their processes, particularly how they communicate their decisions.
“This outcome [gave] the customer the chance to avoid a mortgagee sale, and it also clearly demonstrated the benefits of taking a collaborative and flexible approach towards a customer in financial difficulty.”
She said customers facing difficulty should contact their banks as soon as possible.
“As customers’ financial difficulties deepen, the fewer options a bank has to help. For their part, banks should have a straightforward process for responding to customers who reach out for help.”
– RNZ
