Complaints to banks about lending-related matters rose sharply in the last three months of last year, the Banking Ombudsman Scheme says.
In December, the Government brought in changes to the Credit Contracts and Consumer Finance Act intended to crack down on loan sharks lending to vulnerable borrowers. Instead, it caused banks to closely vet mortgage applicants’ personal finances and spending habits.
After public pressure, last month Commerce and Consumer Affairs Minister Dr David Clark announced "practical amendments" to try to curb the unintended consequences, but will not come into effect until June.
Data published yesterday found complaints about home loan and credits cards rose 24% and 19%, respectively, between October and December last year compared with the previous quarter.
Complaints about long waiting times for loan decisions were up 62% on the previous three months, while complaints about declined applications were up 22%. In total, banks received 24,206 complaints during the quarter, up 3%.
Banking Ombudsman Nicola Sladden was not surprised by the increase as it coincided with the introduction of amendments to the CCCFA.
"We knew some customers wouldn’t be happy about this greater level of scrutiny — or the resulting longer processing times," she said.
Ms Sladden said the tightening of loan-to-value ratios and an increase in interest rates during the quarter were also contributing factors to the spike in lending-related complaints.
