Not upheld: Mortgage administration / arrears handling complaint against Intrum Mortgages UK Finance Limited
Financial Ombudsman decision DRN-5656099 of 2025-06-30T00:00:00+00:00. Mortgage administration / arrears handling complaint against Intrum Mortgages UK Finance Limited. Outcome: Not upheld.
Decision detail
| Reference | DRN-5656099 |
|---|---|
| Decision date | 2025-06-30T00:00:00+00:00 |
| Firm | Intrum Mortgages UK Finance Limited |
| Product | Mortgage |
| Claim type | Mortgage administration / arrears handling |
| Outcome | Not upheld |
| Remedy | Intrum directed to pay £750 to Mr and Mrs Y for inconvenience caused by the delay in providing clear explanation of the interest rate variations. Ombudsman encouraged Mr and Mrs Y to engage with Intrum regarding options to bring the mortgage back on track and to seek independent financial advice. |
Summary
Mr and Mrs Y complained that Intrum charged unfairly high interest rates on their mortgage originally taken with Heritable Bank in 2004. After Heritable went into administration in 2008, the mortgage was transferred with legal title to Intrum (then Mars Capital) while beneficial interest was retained by third-party investors. Interest rates increased significantly from 2008 onwards, eventually causing Mr and Mrs Y to fall into arrears and become 'mortgage prisoners' unable to remortgage due to age and credit history. The ombudsman found that the mortgage terms and conditions permitted Intrum to vary rates based on changes to the beneficial owner's cost of funds, and that rate movements tracked established market reference rates. While sympathetic to their circumstances, the ombudsman upheld Intrum's rate-setting practices as contractually valid and directed payment of £750 compensation for delay in providing explanation.
The Ombudsman's reasoning
The ombudsman found that the mortgage terms and conditions permitted Intrum to vary interest rates based on changes to the cost of borrowing funds. The definition of 'we, us, our' in the terms included anyone taking over legal rights, and the transfer of legal title to Intrum while beneficial interest remained with third-party investors was valid and not unusual in the mortgage market. The ombudsman was satisfied that Intrum had demonstrated the interest rate variations tracked established market reference rates (LIBOR, Term SONIA, Bank of England base rate) which provide a reasonable proxy for the beneficial owner's cost of funds. The 0.5% margin was clearly stated in the original mortgage offer to continue after the fixed rate period ended. While sympathetic to Mr and Mrs Y's difficult circumstances as 'mortgage prisoners', the ombudsman found no evidence of unfair rate setting within the contractual framework.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Intrum Mortgages UK Finance Limited, all decisions | 10 | 20% |
| 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