Upheld: Irresponsible lending complaint against Newbury Building Society

Decision detail

Summary

Miss F, unable to work due to poor health, obtained specialist mortgage advice in 2017 to purchase a property on a shared ownership basis. A broker recommended an interest-only HOLD mortgage with Newbury Building Society, structured so that SMI benefits would cover most monthly payments with Miss F contributing approximately £80. However, weeks after the December 2017 mortgage completion, Miss F discovered that the broker's benefit assessment was incorrect and she would receive £270 less per month than advised due to an oversight regarding her son's residency. This error caused Miss F to struggle with mortgage payments from the outset, leading to considerable stress and physical suffering until her son moved out in November 2019. The ombudsman upheld Miss F's complaint against Newbury, finding it bore partial responsibility for not providing adequate customer support when problems emerged and for initially failing to address end-of-term risks, awarding £500 compensation and requiring Newbury to extend the mortgage term indefinitely.

The Ombudsman's reasoning

The ombudsman found that while the broker bore greater responsibility for the benefit calculation error, Newbury bore partial responsibility as the lender. Although Newbury acted reasonably in relying on specialist broker advice for a niche HOLD mortgage product and in assuming SMI would be received, it could have done more to support its vulnerable customer when problems emerged. Newbury's initial lack of direct contact with Miss F when benefit payments were not received, its reluctance to address end-of-term risks, and its failure to provide adequate support demonstrated insufficient customer care. The ombudsman was satisfied that Newbury played a part in Miss F's difficulties and should compensate her for the trouble and upset caused.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website