Flexi Facility on Home Loan Account
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The complainant asked the bank to activate a flexi facility on his home loan account. Although the bank confirmed that it had complied, the facility was not activated.
He transferred R360 000 into the account, intending to have access to these funds. He also ensured that there were enough funds in his cheque account to cover the monthly bond repayment debit order.
After the deposit, the bank stopped the debit order, which was on a 'due amount' basis, because the account was in advance. The bank paid his monthly instalments from the advance amount for 13 months as the debit order was stopped. He also could not access the funds as the flexi service was never activated.
The complainant wanted the bank to pay him about R16 000 in interest that it earned on his R360 000.
The Ombudsman's adjudicator advised the complainant that a home loan account is not an interest-bearing account, and that the bank did not owe him interest.
Nevertheless, the office believed the bank was negligent in not activating the flexi facility and that it had failed to provide proof that he signed for a 'due amount' debit order, which automatically stops running if the amount owing is in advance. That said, the complainant was also negligent in not realising that the debit order for the home loan account was not deducted from his cheque account and not querying this within a reasonable time.
The complainant did not suffer a direct loss when the bank used the R360 000 to pay his monthly instalments as this was due to the bank and he would have still paid the instalment from his cheque account if the debit order had not been stopped. The complainant further paid less interest on the home loan account due to the advance payment, which benefit exceeds credit interest he would have received on the same amount. Nor did he suffer distress through the non-activation of the flexi facility as there was no evidence that he wanted to use the funds during that time.
In an offer found to be fair and reasonable, the bank offered to pay R1 645 in full and final settlement for the inconvenience.
Lesson to be learnt:
A home loan account is not an interest-bearing account. However, reduced interest is charged if the outstanding balance is low.