Upheld: Mortgage administration / arrears handling complaint against Swift 1st Limited
Financial Ombudsman decision DRN-5514186 of 2025-04-30T00:00:00+00:00. Mortgage administration / arrears handling complaint against Swift 1st Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-5514186 |
|---|---|
| Decision date | 2025-04-30T00:00:00+00:00 |
| Firm | Swift 1st Limited |
| Product | Mortgage |
| Claim type | Mortgage administration / arrears handling |
| Outcome | Upheld |
| Remedy | Swift 1st Limited must re-work the loan account with effect from 1 September 2018 as if interest on the outstanding capital balance had been added to a separate sub-account on a simple not compound basis rather than to the main balance. All payments made by Mr and Mrs F since 1 September 2018 should be applied to reduce the capital balance first, followed by the interest and fees balances. Swift 1st must then inform Mr and Mrs F of the revised remaining balance and work with them to agree an affordable repayment plan. The firm must continue to treat Mr and Mrs F fairly and consider forbearance as appropriate, treating further action as a last resort. |
Summary
Mr and Mrs F took out a £11,000 secured loan in 2004 over a 20-year term but experienced payment difficulties from the outset, resulting in legal action and a possession order in 2008. By 2017, the loan had gone off schedule due to accumulated arrears, fees, and interest, meaning the contractual payments were insufficient to clear the debt by term end. Swift 1st Limited, the regulated administrator from 2017 onwards, made the borrowers aware of the problem through annual statements and conversations, but when Mrs F stated in August 2018 they could not afford to increase payments, Swift 1st simply deferred action until two years before term end rather than offering forbearance. The ombudsman upheld the complaint, finding Swift 1st should have proactively considered support measures such as moving interest to a separate sub-account on a simple not compound basis, allowing payments to reduce capital first. The firm was ordered to re-work the account from September 2018 on this basis and work with the borrowers to agree an affordable repayment plan.
The Ombudsman's reasoning
Although the ombudsman could not consider the lender's actions before November 2017 (outside jurisdiction), the history of arrears, fees, and charges explained why the loan was off schedule by that date. From 2017 onwards, Swift 1st made Mr and Mrs F aware of the problem through annual statements and conversations, but failed to do enough to support them in dealing with it. When Mrs F stated in August 2018 that they could not afford to increase payments, Swift 1st should have proactively considered forbearance options rather than simply deferring action until two years before term end. The ombudsman found that moving interest to a separate sub-account on a simple not compound basis, with payments applied to capital first, would have been fair forbearance. This would have allowed the borrowers to make progress on reducing the capital while interest accumulated separately, rather than compounding the problem. The ombudsman rejected the argument that interest should not be charged after the term end, as the loan agreement continues until the debt is repaid in full.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Swift 1st Limited, all decisions | 37 | 16% |
| Mortgage administration / arrears handling, all decisions | 13,042 | 19% |
| Mortgage, all decisions | 24,740 | 22% |
Source
Read the original decision on the Financial Ombudsman Service website