Customers unhappy with their pre-approved loans being pulled by ASB are being encouraged to take the issue up with the Banking Ombudsman or Commerce Commission.

The bank said on Monday it would withdraw outstanding offers for borrowers with less than 20 per cent equity so it could meet the Reserve Bank's new loan-to-value ratio lending rules. Other banks said they would still honour the offers.

John Land, commercial lawyer at Hesketh Henry in Auckland, said if ASB told customers that they reserved the right to cancel pre-approved loans in the "small print" of their paperwork but did not spell it out verbally, customers would have grounds to complain under the Fair Trading Act.

The Herald asked the ASB for a copy of the pre-approval document and details of what is made clear to customers during the process, but the bank did not respond.


A spokesman for the Commerce Commission, which administers the act, said he was unable to comment as the commission did not know what was written in the contracts.

Deputy Banking Ombudsman Nicola Sladden said: "If customers are unhappy with what the bank proposes, they can complain to the Banking Ombudsman Scheme. We can only investigate complaints once they have been through the bank's internal complaints process."

ASB general manager of product and strategy Shaun Drylie said the bank would still honour pre-approvals for loans of more than 80 per cent for customers who had gone unconditional on a new property, if documents were processed before October 4.

"We would encourage them to contact us as soon as possible to take up their home loan offer."

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