The Debt Panel: 'I applied for a Dh100,000 loan but the bank gave me Dh375,000'

The British teacher from Al Ain only received Dh300,000 of the loan amount and does not know where the missing Dh75,0000 is

Illustration by Mathew Kurian

I am a 52-year-old teacher from the UK and I owe Dh185,000 on a loan I took out in October 2018, which I pay off in monthly instalments of Dh11,340.  

I explicitly told the bank I wanted a 12-month loan for Dh100,000 to cover my rent for a year – something I used to do with a previous lender. The two relationship managers kept informing me that a larger sum over a longer period would be better. I stood by my position and insisted they only give me what I had requested.
I was provided with a series of documents to complete. I was then told to only fill in my personal details and sign the document. I asked them about the remainder of the forms but the relationship managers said they could sort that out. I needed the loan for rent so followed their instructions.
I was then told that once everything was processed and the account opened, as well as the loan money being deposited into the account, they would arrange for the mobile app to be set up on my phone.

I never fully understood why the loan amount is Dh375,000, yet I only ever received Dh300,000. Also, why was Dh45,000 and Dh10,000 needed for credit I never used?

I received my chequebook and then bank card and eventually, over a month later, they set up my mobile app. I then discovered that instead of a Dh100,000 loan for 12 months, it was a Dh375,000 loan spread over three years. However, the amount deposited in my account was only Dh300,000. The relationship managers said that Dh45,000 was taken to clear a credit card with my previous lender and a Dh10,000 overdraft. However, while I had a Dh45,000 credit limit on the credit card, I had never utilised it and I had never used any of the money from the Dh10,000 overdraft limit. Plus the previous bank had issued a non-liability letter when I transferred. I was told that the rest of the 'missing Dh75,000' was for bank fees. The relationship managers said my only option was to pay the instalments.

Since then, I have been contacting different people within the bank to complain, all the way up to the bank’s board of directors, with no joy. I've also complained to the Central Bank of the UAE, through their online complaints form. They replied to say it was not within their scope and I should contact the bank.

Of the extra Dh200,000 they gave me, I ended up unexpectedly moving from Abu Dhabi to Al Ain and used some of it to pay more rent. I have struggled to pay the instalments from the outset and have to watch every dirham I spend. It has been stressing me and affecting my work.

I've never missed a payment on the loan, but it is a big amount for my salary of Dh22,000. Since my move to Al Ain, my salary has also dropped from Dh25,600 making it harder to pay off the loan.

I will clear the loan on October 2021. I support my wife in the UAE, who does not work, and our monthly expenses total about Dh19,750. This includes the Dh11,340 I pay on the loan, Dh3,500 on food, Dh700 for utilities, Dh460 on an internet and phone package, Dh200 for my mobile phone, Dh400 on petrol, Dh2,000 for car insurance and servicing, Dh1,150 for other expenses.

With the high loan amount it is almost impossible to save for the next year's rent and I fear I may not be able to afford to renew my current tenancy. Is there anything I can do here as I believe the bank's representatives fraudulently put me in this position? I never fully understood why the loan amount is Dh375,000, yet I only ever received Dh300,000. Also, why was Dh45,000 and Dh10,000 needed for credit I never used? The situation is worrying and stressful as the bank does not respond to my complaints. The relationship managers that initially handled the loan no longer work for the bank. JG, Al Ain

Debt panellist 1: Ambareen Musa, founder and chief executive of Souqalmal.com

This definitely sounds like fraud, where the two bank employees you were dealing with forged your loan application and then swiped nearly Dh75,000 from the loan granted to you. The fact you placed complete trust in these two bank employees, signing a blank loan application form without seeing the loan details or terms written anywhere, and even having them set up your mobile banking app for you, made you an easy target. It is highly likely that they used your desperation to get a loan to manipulate you into overseeing some of the obvious red flags here.

Since you've already been chasing the bank for nearly two years and have not received a favourable response from the Central Bank, you must go down the legal route to get this case resolved. You may want to seek the opinion of a legal expert, who can explain the next course of action available to you. For pro-bono legal advice, approach the Abu Dhabi Judicial Department or even the British Embassy for a free legal consultation. Perhaps filing a police complaint may be the way to take this forward, but make sure to discuss with a lawyer first. To prepare yourself for any future legal proceedings, be sure to have copies of all written/email communication with the bank and the two bank employees you were dealing with.

Unfortunately, this is not the first time a bank employee has taken advantage of a vulnerable customer and has exploited their own position at the bank for personal financial gain. But we've seen such cases go to court and the accused being brought to book, so you can hope for a speedy resolution through the courts.

A word of caution for all your future dealings with financial institutions: never sign an empty application form for any banking product or service, without filling in all the details and verifying their accuracy. Even when setting up an online or mobile banking service or bank app on your mobile/tablet, you should be doing it yourself rather than let a bank officer set it up for you.

It is also a good idea to get a tracking number or application number when you apply for any banking product. This will enable you to track the status of your application through official bank channels instead of relying on an individual to send updates.

Debt panellist 2: Philip King, head of retail banking at Abu Dhabi Islamic Bank

There seems to be a lack of transparency and communication about the terms of your loan and the information provided by your relationship managers.

It is vital to thoroughly read and analyse your contract before signing documents that will legally bind you to any financial obligation. In addition, maintaining a transparent relationship with your lender and relationship manager is necessary in ensuring that there are no mishaps or doubts when it comes to your responsibilities and commitments.

It is very concerning that you were not provided with the appropriate information and documents beforehand, and that you were charged Dh75,000 for unidentified bank fees. It also does not help that your relationship managers no longer work for the bank and are now uncontactable. This matter should be escalated immediately to higher representatives at the bank. Ensure that you keep a record of all your communications and get any agreement in writing.

If no amicable resolution is achieved with your lender, approach the Consumer Protection Division established by the Central Bank to protect consumers from financial misconduct or unfair banking practices. When liaising with the Central Bank, you must provide proof including copies of your financing contract, statements, correspondences with the bank, and all related paperwork. While their preferred method is online through their website, you can also visit their branches to lodge the complaint in person.

Alternatively, seek the guidance of a financial adviser or a legal professional who may give more clarity on the appropriate next steps.

Debt panellist 3: Steve Cronin, founder of DeadSimpleSaving.com

Your story is a cautionary tale for the rest of us. The problem with these form-filling scams is there may not be much evidence that you only requested Dh100,000. Do you have any written, email or text evidence that you requested this? At least make sure now that you have a clear paper trail showing the date you first queried the amount and the non-liability letter from your previous bank.

It does seem that the relationship managers' activities were either directly fraudulent, finding some way to siphon off the money for themselves, or misusing some processes in the bank to maximise their bonus based on loan size. It is appalling that you did not even receive the full loan amount charged. Keep pushing with the Central Bank, senior bank staff and the police.

You should fight for full reimbursement of all interest and fees at the very least. You may want to consult a lawyer also – look around for one sympathetic to your cause and who may work on a no-win no-fee basis.

Your expenses currently add up to Dh19,750 versus your Dh22,000 salary, and this does not include any rent. You may have to reduce your expenses while you manage this situation. Try to reduce spending on any major items and prevent the small items like food from adding up. Fortunately rents have dropped a lot and you may be able to get a bargain or pay monthly.

The Debt Panel is a weekly column to help readers tackle their debts more effectively. If you have a question for the panel, write to [e-mail]