Not upheld: Mortgage administration / arrears handling complaint against Hampshire Trust Bank Plc

Decision detail

Summary

W, a limited company with one director Mr S, complained to FOS about HTB's handling of its commercial mortgage renewal. The mortgage's fixed rate of 4.59% ended in February 2024, moving to a variable rate of 10.32%, and arrears accrued. After HTB offered new rate products on 24 May 2024 and Mr S selected one the same day, HTB imposed pre-conditions on 30 May 2024 that W could not meet. Mr S argued this breached an agreement, but the ombudsman found that HTB's letter was not a binding offer but an invitation requiring a subsequently signed amendment letter. The ombudsman upheld HTB's right to impose conditions as a legitimate exercise of commercial judgment and did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman found that the letter of 24 May 2024 was not a binding formal offer but rather an invitation to select a product, with clear terms stating that an amendment letter would need to be signed and that HTB could impose conditions if a default occurred. The letter explicitly stated that receipt of a signed New Product Letter would not bind HTB to provide a new rate; only receipt of a subsequently signed amendment letter would do so. Since no amendment letter had been issued or signed when HTB became aware of information with a material adverse effect, HTB retained the right to impose pre-conditions. The ombudsman noted that W, as a commercial entity, is held to a higher standard than a private individual and is not covered by residential mortgage regulatory protections. HTB's exercise of commercial judgment in imposing conditions was therefore fair and reasonable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website