An industry association has publicly shamed banks for their sluggish approach to executing loan discharges for borrowers looking to change lenders.
In response to the increasing reports that banks are taking anywhere from two to four weeks to finalise discharge documents, even after repeated approaches and requests, the FBAA has called for standardised documentation around service level agreements to speed up the process.
FBAA managing director Peter White AM explained, “This appears to be an intentional ploy by the banks that I believe is based on them attempting to cushion their monthly bottom line [while] also buying time so that their staff can continue to reach out to clients and try and retain them with incentives.”
What the banks don’t realise, according to White, is that their lacklustre service only serves to make it incredibly unlikely the departing customers will ever return to the organisation; rather, lenders should direct their efforts into bettering their offering.
“I’d suggest that if a bank is experiencing a major outflow of loans, maybe they need to consider taking a look at their products and evaluating if they are meeting the needs of the borrowing marketplace,” said White.
The FBAA head emphasised that even decades ago, it took only 30 minutes to manually write up loan discharges and then just around three days for the entire process to be completed and Certificate of Title to be issued.
Now, in today’s marketplace, White believes universal, standardised loan discharge agreements, loan application forms and privacy act forms should be available.
Creating these better service level agreements “should be a no-brainer, as all requirements by lenders are largely the same”, said White.
“When we have platforms like PEXA creating universal e-settlements as well as the likes of Green ID and others, there are no real barriers to make these universal forms a reality.”