AFCA, for the third time, has found in favour of a Bank of Queensland borrower in a protracted dispute centred on the bank’s responsible lending obligations.
In May 2015, the bank provided the complainants with a $650,000 residential construction loan. The loan funding included the refinance of an existing loan ($148,393) which related to the earlier purchase of a vacant block of land on which a residential home was to be constructed.
Nine years later the borrowers and BOQ were at a standoff and now an AFCA determination has provided considerable relief to the borrowers, at great cost to the bank.
After AFCA had found in their favour in two earlier disputes, the complainants raised their latest complaint based upon the bank’s obligations to establish the loan could be repaid without financial hardship and whether the loan met their requirements and objectives.
In assessing this complaint AFCA, in a recent determination, said it only considered these issues and has not revisited any other areas of responsible lending which were previously dealt with in the earlier determinations.
FAC found in 2015 the bank completed a servicing assessment that had a monthly surplus of only $6 after including the living expenses figure used by the bank.
The AFCA Ombudsman wrote that “in my view the bank’s assessment was deficient because the available information shows the bank:
• did not make adequate enquiries about the complainants’ financial position or requirements and objectives including discussing all of their expenses
• failed to appropriately make enquiries about or include school fees in its assessment
• did not address how extra items would be funded that were not covered by the loan funds but which were required to complete the property
• did not take into account that the complainants had no extra funds to complete the property and possibly had to borrow funds to complete
• did not exercise the care and skill of a diligent and prudent lender.
AFCA calculated the complainants’ net financial loss including taking into account interest and fees paid.
“The complainants’ net loss as at 26 February 2024 being (their gross loss less their benefit) is $112,510.
“The bank should deduct this amount of $112,510 from the outstanding balance of the loan as at 26 February 2024 to calculate the adjusted loan balance.”