Not upheld: Other regulated complaint complaint against Saffron Building Society

Decision detail

Summary

L, a limited company, complained that Saffron Building Society offered a business loan with an on-demand repayment provision that was not disclosed in the heads of terms and was inconsistent with L's stated requirement for a fixed 18-month term. L's directors claimed they would not have paid the valuation and commitment fees (approximately £2,000) if they had known about the on-demand clause. The ombudsman found that heads of terms are outline documents by nature and do not set out all terms and conditions, and that L's directors had the opportunity to raise concerns about specific unacceptable terms before submitting the application and paying fees. The complaint was not upheld as there was no evidence that L's directors asked about the on-demand provision before paying the fees.

The Ombudsman's reasoning

The ombudsman found that heads of terms are by nature outline documents not intended to include all terms and conditions. The heads of terms explicitly stated they were outline only and not a formal offer. The on-demand provision is standard for development finance. L's directors had the opportunity to raise specific concerns about unacceptable terms before submitting the application and paying fees, but there is no evidence they did so. If the on-demand provision was important to them, they should have asked about it at the outset rather than after receiving the formal offer.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website