Participating in the Home Buyer’s Plan (HBP) twice

A client was solicited by a bank mortgage broker for a mortgage for his new house. They discussed the Home Buyer's Plan (HBP) option, a government sponsored program that allows consumers to withdraw up to $20,000 from their RRSP without penalty to buy or build a home.

The client, who had participated years ago in the same program, asked the representative if he could qualify again. He verified that he had not owned a house in the last five years and said that he was eligible. The client then withdrew funds from his RRSP to make the down payment.

A year later, the client received a notice from the government stating that he must remit income tax on the RRSP withdrawal because he had not finished paying back the funds he withdrew from the RRSP the first time he used the HBP.

OBSI concluded the client had been badly advised by the bank representative. However, we also attributed partial responsibility to the client who had an opportunity to review the conditions of the program when he was filling out the application forms. After we intervened in the case, the bank loaned the client funds to put money back in his RRSP. The bank also reimbursed him for his interest loss as well as compensated him for inconvenience.

(2007)