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Case Review: Banking
Summary of some of the decisions made by the Mediators on some of the complaints received by FMB.
This summary is for information only and should not be used for other purpose. [Previous]………[Next]
PENALTY INTEREST (Case reference no : 6-082)
Madam B purchased a property at a Public Auction. The vendor of the property was Bank Z and the auction was held to recover monies from its borrowers who were beneficial owners of the property.
As Madam B was a successful bidder, she paid a deposit. At the auction, she applied for a loan for the balance of the purchase price from Bank Z's main branch. The sale was to be completed within 120 days from the date of sale. Bank Z's main branch approved the loan application and Madam B accepted the offer. Loan documentations were drafted by Bank Z's panel solicitor. There was a delay in the documentation and the bank's solicitor had requested for extension of time to complete the sale. Bank Z granted an extension of time on condition that Madam B pays penalty interest at 8.5% per annum on the outstanding amount.
An inquiry was held to hear the claim.
Madam B had done all the needful to execute the security documents and pay the difference between the purchase price and the loan within the period of 120 days. The bank confirmed that the delay was the fault of its solicitors.
From the outset, Bank Z as the lending bank is fixed with notice the completion date of the sale. Despite this notice, the bank and its agent solicitor failed to ensure that the needful was done. The bank cannot say that their collection department it not responsible for the delays of the conveyancing department. As far as the public is concerned, it deals with the bank.
It is clear that the delay was caused by Bank Z and its agent solicitor. Madam B's claim for a refund of penalty interest was allowed.
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