Not upheld: Account administration errors complaint against Swift 1st Limited

Decision detail

Summary

The executor of Mrs T's estate complained about the amount Swift required to clear a second charge mortgage loan to allow the charge to be released. The original loan of just over £10,000 taken in 2007 had accumulated significant interest and charges before Swift took over administration in 2016. Swift subsequently ceased charging interest and arrears management charges, and the balance reduced from approximately £50,000 to £38,000 through regular payments before Mrs T's death in 2023. The estate offered to settle for either £5,000 or £10,744 (the original amount borrowed), but Swift rejected both offers and required full contractual repayment of approximately £56,000. The ombudsman found that Swift appropriately administered the mortgage according to the lender's terms and conditions, was not responsible for the lender's prior decisions regarding fees and charges, and was entitled to require full contractual repayment before releasing the charge.

The Ombudsman's reasoning

The ombudsman applied a six-year limitation period, considering only Swift's administration from February 2018 onwards. During this period, Swift ceased charging interest and arrears management charges, meaning all payments reduced the principal. The only charge applied (£10 litigation fee in May 2024) was reasonable given the circumstances. Swift, as administrator rather than lender, was required to administer the mortgage according to the lender's terms and conditions and was not in a position to make judgements about the lender's prior decisions. The contractual amount owed includes all interest and charges properly applied under the loan agreement's terms, not merely the original borrowing amount. Swift was entitled to require full contractual repayment before releasing the charge, as this is standard practice in secured lending.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website