In April 2023, Morris stopped making loan repayments and went into arrears. He decided to rent the home and moved out. He asked the bank to change his repayments to interest only, but it didn't respond. He asked again in August, and the bank asked him to complete a statement of financial position, which he did not do. Morris contacted the bank about his arrears in late November 2024, but the bank did not respond. Morris followed up in January 2025 and entered into a repayment arrangement, although he did not follow it. The bank said it would be willing to consolidate the arrears into the loan if he could make repayments on time for three months. In February 2025, after Morris failed to make any repayments, the bank issued a formal demand for payment of the arrears.

Morris complained about the lack of support the bank had given him. He asked for copies of his personal information. The bank failed to provide all of the information at first, but it subsequently supplied the missing portions. The bank responded to his complaint, but Morris did not agree with its position and wanted to take the complaint further. The bank issued a notice under the Property Law Act 2007 saying it would sell the house unless he paid the arrears by a certain date. Morris complained that it should not take debt recovery action while his complaint remained unresolved. In October 2025, the bank gave Morris its final response to his complaint, saying he could contact us, and closed the complaint file. Morris objected, saying he wanted the complaint kept open. He then complained to us.

Our investigation

The Credit Contracts and Consumer Finance Act 2003 allows customers to apply for hardship support, but they cannot do so if they have been in default for more than two months. By the time Morris told the bank about his circumstances, he had been in default for more than two months, and he therefore wasn't eligible to apply for hardship support under the Act.

Despite this, the bank still had an obligation to treat him in a reasonable and ethical manner when he failed to meet his loan repayments. We considered that it had mostly done so: it was in regular contact with him, asking him to bring the accounts back into order, gave him information about hardship support and financial mentoring services, offered repayment arrangements, was prepared to considered interest-only repayments if he supplied a statement of financial position, and was also prepared to consolidate the arrears into the loan if he could meet the repayments for three months.

However, elements of the bank's service were inadequate. Morris twice contacted the bank but received no response. The bank also omitted some of the personal information he requested. Even so, these failings had no tangible impact on his financial situation.

We considered the bank had responded appropriately to Morris’ complaint. Once a bank has fully considered a complaint, its next step is to refer the customer to us. Even though Morris wanted the bank to continue considering his complaint, it was entitled to conclude its internal process. Furthermore, the existence of an active complaint did not prevent the bank from taking debt recovery action in a situation such as this.

Outcome

We concluded that the bank had met most of its obligations, although we recommended $500 compensation in recognition of its communication failures.