There were a significant number of complaints related to property lending, ombudsman Nicola Sladden says. Photo: RNZ
A borrower who was facing a forced sale of his home has received $4000 from the bank towards renovations, plus $500, after he complained to the banking ombudsman.
The Banking Ombudsman Scheme has released its latest annual report, which shows that while its overall caseload was down 3 percent, to 5882 cases received, there was a 55 percent rise in hardship complaints.
It said 94 percent of cases were resolved through its early resolution service.
Just under 40 percent of cases related to scams.
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 he only could not apply for a fixed rate when he was actually in arrears.
He said, 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 Banking 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 enabled 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."
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