Bank entitled to rely on broker’s instructions about terms of refixing loans

Categories:

Advice & information, Instructions not followed, Lending, Fees, charges & rates,

Summary:

Eric was a trustee of a trust that had home loans with the bank. He complained about changes to three of the trust’s fixed-rate home loans that were made in April 2022. The loans were refixed before their terms ended. Eric said the bank did not explain the effect of the changes, so he could not make an informed decision. Eric also said the bank acted unfairly and oppressively, that it gained an unfair advantage, and shifted responsibility to his mortgage broker.

Published:

June 2026

Our investigation

We looked at how the bank received the refixing instructions. The bank’s records showed Eric’s mortgage broker sent those instructions on Eric’s behalf and gave the bank Eric’s email authority. The records also showed Eric was in regular email contact with the broker while the refixing was being arranged. Eric had previously refinanced and refixed loans through the same broker. Responsibility for providing advice and recommendations about options, consequences and suitability lay with Eric’s broker.

The trust had several loans on different terms and rates. The broker told the bank he had recommended the loan structure because fixed rates offered certainty. In those circumstances, the bank could deal directly with the broker and was not required to check those instructions with Eric or give him separate, comparative advice or modelling.

The records showed the bank documented the changes in loan variation letters and refixed the loans on the terms requested. The broker also asked about early repayment charges, and the bank confirmed none would apply. Neither Eric nor his broker raised any objections with the bank at the time of the refixing or in the years immediately following April 2022.

We also considered Eric’s complaint that the bank’s conduct was oppressive. Such conduct is harsh, unconscionable, unjustly burdensome or in breach of reasonable standards of practice. Acting on clear instructions provided through a mortgage broker did not come close to that high threshold.