Partially upheld: Complaints handling failures complaint against Prudential Lifetime Mortgages Limited
Financial Ombudsman decision DRN-2383499 of 2021-06-07T00:00:00+00:00. Complaints handling failures complaint against Prudential Lifetime Mortgages Limited. Outcome: Partially upheld.
Decision detail
| Reference | DRN-2383499 |
|---|---|
| Decision date | 2021-06-07T00:00:00+00:00 |
| Firm | Prudential Lifetime Mortgages Limited |
| Product | Mortgage |
| Claim type | Complaints handling failures |
| Outcome | Partially upheld |
| Remedy | Prudential Lifetime Mortgages Limited ordered to pay a further £100 compensation to Mr and Mrs H (in addition to the £100 already paid) for lack of clarity regarding porting conditions and distress and inconvenience caused during the house move and complaint process. If the first £100 cheque was not cashed, Prudential should cancel it and pay the full £200. |
Summary
Mr and Mrs H complained about being required to make a part repayment of £22,520.43 when porting their 2007 equity release mortgage to a new property in 2020. They believed the comparison should be between the new property value (£525,000) and the original property valuation (£400,000), not the sale price (£660,000). Prudential calculated the requirement based on a 30% maximum loan to value cap applicable to their product and ages. The ombudsman found the mortgage was not mis-sold and the part repayment requirement was fair, but upheld the complaint insofar as ordering additional £100 compensation for inadequate explanation of porting conditions in 2007 and poor complaint handling.
The Ombudsman's reasoning
The ombudsman found that Prudential correctly followed its lending criteria and was fairly entitled to require a part repayment based on the 30% LTV cap applicable to the product and the borrowers' ages. The calculation methodology using current sale price and purchase price (rather than original valuation) was correct. However, the ombudsman found that the adviser could have done more to explain the porting conditions in 2007, particularly that the maximum loan amount for any future property would be calculated based on factors including the borrowers' ages at the time of application, and that this could impact them even if moving to a higher-value property. The ombudsman also found that Prudential's complaint handling was poor, taking the full eight weeks allowed without explaining the part redemption requirement, and only providing explanation after a follow-up complaint.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Prudential Lifetime Mortgages Limited, all decisions | 12 | 8% |
| Complaints handling failures, all decisions | 4,445 | 37% |
| Mortgage, all decisions | 24,740 | 22% |
Source
Read the original decision on the Financial Ombudsman Service website