A borrower whose lender accidentally cancelled their repayments has had their interest rate cut as compensation.

The man complained to Financial Services Complaints Ltd (FSCL), one of the external dispute resolution schemes that handles complaints about financial services providers.

The scheme does not identify the people who complain or the organisations complained about.

The man and his wife were co-borrowers on a loan for a vehicle, which they took out in 2023. They made their payments by direct debit but in late 2024 an admin error by the lender meant the direct debit was cancelled.

The couple did not notice and by the time the lender spotted the problem, they were $3600 behind in payments.

The lender apologised and offered to waive fees and interest of about $1300, and to set up a payment plan for the missed payments. The man said he was not satisfied with that proposal and he thought that the arrears, including the repayments of principal that should have been made, should be waived.

FSCL looked into it and said it was fair for the couple to pay the missed payments, because they were required under the loan contract.

But it said it was also fair for the lender to offer a resolution that reduced the financial impact on them. Waiving fees and interest was a helpful starting point.

The lender then agreed to reduce the interest rate from 12.95 percent to 9.95 percent and to move the missed payments to the end of the loan term so they paid the loan for longer rather than facing higher repayments.

"This outcome meant [the man] and his wife did not need to increase their regular repayments to clear the arrears and would pay approximately $1500 to $2000 less in interest over the life of the loan."

FSCL said it was important for borrowers to check their bank statements regularly to ensure that payments were being made.

"Even when a lender makes an error, missed payments under a loan contract may still need to be repaid. If something goes wrong, discuss options that reduce the longer term cost of the loan or the impact on day to day repayments."