Martin Hawes: Don't bank on infallibility

Last week I worked with a client who had sold his house.

He had several loans over it; some of which were on a fixed rate and some which were also secured against two other properties in a fairly complex scenario.

Mindful that banks are using different methods to calculate the break fee on fixed-rate mortgages, I suggested the client get the bank to write to him setting out the cost of breaking the loans.

The reply he received was perhaps the worst piece of "professional" writing I've ever seen - it looked like it had been written by a 16-year-old who had just failed NCEA Level 1. It was full of spelling mistakes, poor grammar and bad syntax, and even the client's name was misspelled.

However, the worst of it was that as a financial adviser, I couldn't follow the bank's calculations. For my client, with no finance background, the letter might as well have been written in Swahili.

We sent it back with a "please explain" note and are still waiting for something to arrive that might be useful. Judging by the bank official's first attempt, it could be a long wait.

I do not write this as some kind of plea for plain English - although that is a useful enough plea to make - nor am I simply railing against very poor customer service - although I could.

Instead, I want to point out that banks and bankers make mistakes, not only in their attempts at writing English, but also in their calculations.

I am sure that when we get a response from the bank, the break fees will be different - and more favourable for my client.

It is dangerous to assume basic calculations by a banker are done correctly - it pays to check everything you get and get someone independent to check anything you don't understand.

Secondly, stand up to the bank. My client could easily have dismissed the letter as being too incomprehensible and simply accepted the bank's calculations. Banks seem such big organisations - almost like Work and Income New Zealand or the Inland Revenue - with the rules they apply akin to an official body.

In fact, a bank is a business like any other. Just like a panel beater or a hairdresser, it is there to make a profit and needs your custom. It can and should be queried and negotiated with.

Do not put banks on a pedestal and think that their people know it all. Treat banks just as you would any other business you deal with.

* Each week financial author Martin Hawes shares strategies to help you grow your wealth. You can email finance questions to info@wealthcoaches.net or andrea.milner@heraldonsunday.co.nz

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