These case studies have been modified so as not to identify any actual cases at FIDReC. They are provided for purposes of learning and are not necessarily indicative of outcomes at FIDReC.


Thomas took up a mortgage loan with the Bank. The mortgage loan was pegged to the Bank’s prevailing Board Rate and amounted to 1.5% per annum. There was a 2-year lock-in period. This meant that Thomas could not make any amendments to his existing loan or refinance the loan with another bank during this period.

Some months later, Thomas discovered that the amount deducted from his bank account for the mortgage loan was more than usual. Thomas checked the Bank’s website and found that the Bank had increased its Board Rate by 0.5% per annum. This meant that Thomas would have to pay a higher interest rate of 2.0% per annum for his mortgage loan.

Thomas contacted the Bank and asked to change his existing loan package to one with lower interest rates. Because Thomas’ loan was within the 2-year lock[1]in period, the Bank told Thomas that he had to pay a 1.5% penalty fee for any changes. Thomas sought a waiver of the fee, but the Bank did not agree. The Bank referred Thomas to FIDReC since Thomas was not satisfied with their response.

At FIDReC’s mediation, the Bank’s representative explained the terms of the mortgage loan to Thomas. She showed Thomas the clause that allowed the Bank to adjust interest rates on giving 30 days’ notice. She also explained the 1.5% penalty fee for any changes made to the loan within the 2-year lock-in period.

Thomas did not accept the Bank’s explanation and decided to refer the matter for adjudication.

At adjudication, Thomas admitted that he did not read the loan contract before he signed it. However, Thomas argued that the Bank failed in its duty as it did not fully explain the contract to him. The Bank’s witness testified that the contract had been explained to Thomas. The Bank also showed evidence that it had given notice of the increase in the interest rate by sending Thomas a letter. Thomas insisted that he did not receive the Bank’s letter.

After considering all the arguments and evidence, the Adjudicator dismissed Thomas’ claim. The Adjudicator found that there was no persuasive evidence that the Bank had failed in its duty. In fact, the evidence showed that the Bank had acted according to the loan contract.


Key Learning Points

  • Do your due diligence and make sure you read and understand all the key terms in your loan contract. Clarify with the bank if you have any questions before signing.
  • Understand the calculation of the interest rate for your loan (e.g., fixed rate or floating rate)
  • Take note on whether there is a lock-in period. There is usually a penalty fee if you make any changes to your mortgage loan within the lock-in period.
  • Generally, signing on a contract means that you accept and agree to all the terms.
  • Be aware that Banks can revise their loan interest rates in the manner stated in the contract.


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