A Brisbane family have been locked in a “ridiculous” battle with their bank over a major interest rate mistake, which had cost them more than $17,000.
Andrew Ferguson and his wife Belinda purchased and renovated their dream four-bedroom home around six years ago to live in with their two kids.
They currently have a home loan worth just over $700,000 with St George Bank.
When interest rates dropped to record lows during the pandemic, the couple reached out to their mortgage broker to refinance.
The dad-of-two said they decided to split their loan and fix $500,000 worth of their mortgage at a rate of 1.88 per cent for three years.
“With all the banks dropping their interest rates to record lows it was a good time to review our current situation and I think a lot of people did it at the same time,” he told news.com.au. “I think you would be mad to call the bank and say put me on variable – a lot of people were looking to fix their interest rates.”
In June 2021, an email to their broker from St George Bank confirmed the change had been made.
But the couple were shocked to discover 18 months later that the new interest rate had never been applied and they had been increasingly slugged with rising interest rates as the Reserve Bank of Australia pushed through 10 consecutive hikes taking the cash rate up to 3.6 per cent.
The couple were being charged 6.27 per cent on the $500,000 portion of their home loan instead of 1.88 per cent.
This means they were paying a whopping $2288 each month compared to just $1596 if they had been on the much lower rate.
But while Mr Ferguson thought the problem would be easily resolved – it turned into a nightmare with St George, which is owned by Westpac, looking to blame everyone else for the mistake.
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At first, St George blamed his broker for not filling in a particular form to finalise the matter – even though it was never mentioned or requested – and the broker had received a confirmation email that the new interest rate had been put into effect.
Mr Ferguson said he was told by the bank on the phone that the form was “common knowledge”.
“When I discussed this with my broker he said I manage 40 different lenders and everyone has different procedures and process,” he said.
“No broker knows every inner working of every bank they deal with.”
When the 43-year-old complained to the bank in February this year, the bank rejected his claim to have the lower interest rate applied in just the space of two days.
“After I spoke to the broker and he provided all the written formal evidence, I thought this should be pretty straight forward resolution because the bank has it in writing but then they started becoming awkward and putting us in a game of spin cycle with the customer complaints process,” he said.
“It’s so frustrating and it has wasted so much time when it is black and white and should be an easy fix. The more it goes on, the more it is starting to drive me around the bend – it makes you look at the bank’s history and look at all the fines that Westpac have had to pay out over the years.
“I think they copped one of the biggest fines in history not long ago for charging people who were deceased and you look at the amount of profit they make and how much of that profit is taken from gouging their customers each year?
“I think I am not going to allow them to stand there and brag about their record profits and be one of the people they gouge every year.”
As a result, the couple were forced to lodge a complaint with the external dispute resolution scheme the Australian Financial Complaints Authority (AFCA).
But in response, St George blamed the family for not picking up on the error earlier, claiming it should have been known “when the six-monthly home loan statements were issued to both borrowers on 17 July 2021”.
“It did take us quite a while to work this out, but Covid was happening at the time, the kids were getting sent home from school, everything was a bit hectic … My wife manages the bills and stuff like that … it wasn’t for a while that she noticed that we were getting charged more but because the loan is split its harder to work out,” he said.
“In my defence … it’s the same problem if you noticed it on the first day or the last day, what’s the difference?”
Instead, in response to the AFCA complaint St George said as a “gesture of goodwill” they would offer a one off refund of the annual fee of $395.
But Mr Ferguson rejected the insulting offer as he estimated he would lose at least $37,000 over the three-year fixed period if the error was not corrected.
“That’s just ridiculous I mean they are getting to the point that if they were a country they are like Russia as they have no morals,” he said.
He added while they were in a “lucky” situation, the money could be invested elsewhere and the stress created had made their young children fear they were going to lose their home.
But after news.com.au reached out to St George bank for comment on the situation, Mr Ferguson said they had done a complete “backflip” on their decision and will now honour the ultra low interest rate requested back in 2021.
They have also refunded the family $17,376 in overpaid interest and offered $2000 to the couple “for any frustrations this matter has caused”.
Mr Ferguson said he had reluctantly accepted the $2000 but said the bank only changed its mind once news.com.au held it “accountable”.
“The whole strategy applied by the customer care team at St George was to shift the blame onto me and my mortgage broker,” he added.
“It was as clear as crystal where the error was made on the first day I presented the evidence.
Sad world we live in when the ethical line between corporate profits, media image and customer satisfaction are blurred. Nobody wins in this situation.”
A Westpac spokesperson said due to confidentiality obligations they were unable to comment on individual customer matters.
“When a customer raises a concern about their home loan, if an error has been made, we ensure the customer is not left out of pocket. We apologise for the inconvenience caused,” they said.