Not upheld: Mortgage administration / arrears handling complaint against Intrum Mortgages UK Finance Limited

Decision detail

Summary

Mr F complained that Intrum charged unfairly high interest rates on his buy-to-let mortgage that did not track the Bank of England base rate. The mortgage originated with Heritable Bank in 2007 and was transferred to Intrum in 2013 after Heritable's administration. Intrum explained that interest rates were varied based on changes to the beneficial owner's cost of funds, which were linked to LIBOR and Term SONIA reference rates, not the Bank of England base rate. The ombudsman found that the mortgage terms permitted such variations and that the evidence showed rates moved in line with these market reference rates. The complaint was not upheld, but Intrum was directed to pay £750 for the inconvenience caused by the delay in providing a clear explanation.

The Ombudsman's reasoning

The ombudsman concluded that the mortgage terms and conditions permitted Intrum to vary interest rates based on changes to the beneficial owner's cost of funds, not solely the Bank of England base rate. The terms allowed for transfers of both legal title and beneficial interest separately. Since Intrum became the legal title holder while beneficial interest was held by investors, the reference to 'we' in the terms included both Intrum and the beneficial owner. The evidence showed that interest rates varied in line with LIBOR and Term SONIA, which are reliable proxies for market rates and the beneficial owner's cost of funds. Therefore, the interest rate variations were permitted by contract and fair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website