Key-cutting business is surprised by amount of monthly repayments

A key-cutting sole trader complained that the monthly direct debit taken by the bank to repay a Bounce Back Loan was not the amount he had expected.

We found that the bank had initially informed the customer that, after the initial 12-month payment holiday and interest-free period, he would be required to repay the capital of the loan at a specified amount per month plus interest. However, the bank didn’t specify what that interest would be. Later, prior to the first direct debit, it mistakenly informed the customer that the amount to be debited would be just the amount it had previously specified for the capital, with no mention of any amount for interest.

We said that the bank should have done more to explain upfront to the customer the amount it would be required to pay, specifying both the capital and initial interest to give the total amount per month. This should have been confirmed in the notice prior to the first direct debit.

We then considered what should be done to put the customer back into the position it would have been in had these steps been taken. We judged that the customer would still have taken the loan, so the outcome was the same. Therefore, we didn’t require the bank to make any change to the loan repayments. However, we did say that the customer had suffered some distress and inconvenience from the bank’s mistakes so required the bank to pay the customer an amount in compensation.