Refinanced, but the bank is holding my funds
I refinanced our first home to 80% loan to value, taking money out to consolidate debt and update the bathrooms and kitchen (and a few other small projects). We closed the deal a month ago and there was a conversation at the time about the use of the reno funds, as the bank wanted to assure themselves that I would make prudent use of the money and complete the reno (I even had to submit a detailed reno budget). They would hold the reno funds and release the money as I presented invoices and receipts.
I have submitted two receipts by now, and both had issues. The first one "lacked necessary details"; this was resolved by me pointing out all the "missing details" on the document submitted. The next one was "too small" -- I was asked to batch my receipts and submit them all together. I objected that I don't want use my credit cards to carry debt and suggested a petty cash system using a savings account for me to draw from freely, to be replenished once documentation is provided accounting for the funds, while large items would be dealt with outside of this fund, preventing the banks time being wasted by multiple small submissions. This was declined because "the bank needs to control these funds. (The funds currently sit in a savings account with a hold on the entire amount.) An anecdote was presented about a couple that used their funds irresponsibly and failed to complete a basement reno. When I said that it sounded like the bank does not trust me to spend my money responsibly the agent relented (on the matter of this one receipt, and agreed to process, sounding RATHER annoyed at doing so.
I have reviewed the agreements we signed, and this "control over funds" is not addressed in any document. It occurs to me that while I complete this reno, they bank has my funds and can profit from them. I would rather profit from them over this time.
Without a signed agreement to this nature, what right does the bank have to hold my money? Can I simply withdraw my consent to this arrangement and demand my money released? Should I negotiate with them, or hire a lawyer? What are my rights here?
EDIT: my bank is a regional credit union in Ontario. Apparently my agreement states they can cease doing business with me at their discretion should I become a member not in good standing (unclear what that means), meaning my mortgage becomes due suddenly?