Bank entitled to restrict account access but failed in its communication

Categories:

Service problems, Bank accounts, Closing/Freezing accounts, Bank decisions,

Summary:

In November 2025, the bank restricted access to Gwen’s mother’s accounts after learning of a disagreement between her and her brother, who both held enduring power of attorney. Gwen said the bank did not tell her it had taken this step and handled her complaint about this poorly. She also said the bank should not have approved a $70,000 home loan top-up for her mother in January 2021 because it was unaffordable, and because her mother was suffering cognitive decline at the time of applying for the top-up. She sought compensation of $10,000, reimbursement of repayments and cancellation of the remaining debt from the $70,000 top-up.

Published:

September 2026

Our investigation

The bank was entitled to restrict access to the accounts after one attorney expressed concern about payments being made. The bank’s terms and conditions allowed it to suspend access if a dispute arose about how an account was being operated. However, the terms and conditions also required it to tell affected the individuals why it had taken this step and what they needed to do to restore access. It was not until six weeks later that the bank told Gwen about the restriction, and then only after she had contacted it. We found the bank breached its terms and conditions by failing to communicate promptly with her.

We found the information available to the bank at the time it approved the $70,000 top-up did not show her mother lacked the mental capacity to make the decision to borrow more money. Her lack of capacity was not formally certified until June 2022. The bank discussed the purpose of the loan extension with her directly, verified her income, considered her living arrangements and financial support from family members, and assessed her expenses and repayment ability. We found the bank made reasonable inquiries and had a reasonable basis to conclude the lending was suitable and affordable.

As for how the bank handled Gwen’s complaint, we found it failed to deal with it fairly and effectively. It did not promptly assign it for independent consideration, did not keep her adequately informed of progress, and made a significant factual error in its first formal response to her. Further delays followed.

The bank’s failures did not cause Gwen any direct financial loss because the account restrictions would have remained in place even if it had communicated properly. However, the delayed notification and poor complaint-handling caused Gwen stress and inconvenience. We considered the bank's offer of $650 fairly recognised this impact.