I recently refinanced my loan and was offered a discount of 0.9% off the standard variable rate (business loan with residential property as security). I signed the Letter of Offer document and returned it to the bank.
Subsequently, my business banker informed me that an error had been made and the standard variable rate applied. He offered me the choice of taking up one of the fixed rates or accepting the standard variable rate. I told him to leave it as a variable rate.
I then lodged a dispute with the Financial Ombudsman Service (FOS) along with the Dispute Resolution area of the bank. The bank has called me and offered 0.35% discount, I have made no commitment. My Accountant and the FOS are both of the opinion that the Letter of Offer is a binding contract and the bank are obliged to honour the discounted rate.
My stance is that the offered and accepted rate is legally binding. My concern is that I will have to go through legal negotiations to reach this conclusion and I am not entirely sure how to approach the matter. My other concern is that even if I do win, the bank could simply withdraw funding.
Is anyone able to offer any advice, similar experiences or wisdom regarding this matter?
Links to similar situations appreciated, my search did not find anything.
Thanks
That would be a shock to the system.
Was it an error? Or did you negotiate a 0.9% discount and do you have evidence of this?
The contract would allow the bank to vary the interest but the wording is probably such that it is 0.90% off the variable rate so they would have little room to move. Sounds like a binding contract. I am sure if it was the other way around – where you agreed to pay an extra 0.90% then they would be acting differently.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
0.9% on a $500k loan saves you in the order of $4500 per year. PER YEAR. That's quite a saving. I'd be keen to get my way.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
We'd all be extremely interested to hear how this pans out… would you keep us posted on developments?
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
If you ask the bank if it’s a binding agreement, what do they say ?
possibly one of those situations where you could win a battle and lose the war.
Banks have so much discretionary power, you could expect them to use some later.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
I agree with the previous comments made that i hate to say i think there is little room for the lender reversing their decision but would be very interested to see how this pans out.
Whilst you have already lodged the complaint with the Banking Ombusman you might also wish to see what the Banks publicity department have to say. Tell them the local paper wanted to know who to contact to run a story on Big banks squeezing mortgage battlers. Always works wonders.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Richard wait till you hear what St George did this week… you will love it
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi JacM.
Put it right here so we can all see what St George did pls.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
You must be logged in to reply to this topic. If you don't have an account, you can register here.
