Not upheld: Mortgage administration / arrears handling complaint against United Trust Bank Limited

Decision detail

Summary

Miss R complained about additional interest and fees totalling £1,198.78 that UTB added to her mortgage account, bringing the redemption amount to £37,505.95 compared to the original £32,990.00 borrowed. From September 2021, Miss R was unable to maintain her mortgage payments due to financial hardship caused by her son's accident, resulting in arrears and multiple returned direct debits. UTB charged fees for each returned direct debit, additional interest on unpaid interest, and a field agent visit fee. The ombudsman found that all charges were permitted under the mortgage contract terms and UTB's tariff, and that UTB complied with regulatory requirements regarding direct debit charges during payment shortfalls. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that UTB acted within its contractual rights and regulatory obligations. The mortgage deed permitted UTB to charge additional interest on unpaid interest, and UTB's tariff of charges permitted fees for returned direct debits and field agent visits. While MCOB 13.3.1A restricts charges during periods of consideration following two consecutive months of unpaid direct debits, the ombudsman interpreted this rule as applying only to charges raised after the period of consideration begins, not to charges during the initial two consecutive months. The ombudsman acknowledged Miss R's financial hardship but concluded that under the mortgage terms she agreed to, she was liable for these additional charges when unable to meet payments as they fell due.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website