Not upheld: Mortgage administration / arrears handling complaint against ALLICA BANK LIMITED

Decision detail

Summary

Mr B1 and Mr B2 complained that Allica Bank Limited issued incorrect redemption statements for their secured commercial loan, with the March 2024 statement understating the redemption amount by approximately £6,000. They claimed this caused them financial loss as they had based their property sale plans on the incorrect figure. Allica acknowledged the errors were due to manual calculation mistakes and offered £568.74 in compensation. The ombudsman found that while the errors were genuine and caused stress and inconvenience, there was insufficient evidence that Mr B1 and Mr B2 suffered actual financial loss, as the property sold for over £1,200,000 with net proceeds of £585,000, more than sufficient to cover all obligations. The ombudsman accepted Allica's compensation offer as fair and reasonable for the stress and inconvenience caused.

The Ombudsman's reasoning

While Allica made clear errors in the redemption statements, the ombudsman found no credible evidence that Mr B1 and Mr B2 suffered financial loss. The property sold for over £1,200,000 and the net proceeds of £585,000 were more than sufficient to repay the full loan amount and costs. The ombudsman rejected the argument that they would have marketed the property at a higher price or not sold at all, finding this not credible given they successfully sold for over £1,200,000. Without evidence that the £6,000 difference prevented them from proceeding with their plans for the proceeds, financial loss could not be established. However, the errors did cause stress and inconvenience, particularly given the timing shortly before completion and the need for corrected statements.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website