Not upheld: mortgage administration, arrears management, repossession, and alleged failure to collect payments complaint against Bank of Scotland plc

Decision detail

Summary

Mr B complained that Bank of Scotland incorrectly set up his 1998 mortgage on an interest only basis when he believed it was a repayment mortgage, failed to collect payments leading to 2012 repossession, and took legal action despite his payments. The ombudsman found no evidence the mortgage was ever set up as repayment, that Bank of Scotland sent annual statements clearly showing interest only status to Mr B's requested addresses, that payment failures resulted from Mr B switching accounts without transferring the direct debit, and that legal action was reasonable when the term ended in 2023 without an agreed repayment plan. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Bank of Scotland properly set up the mortgage as interest only (which was common in 1998 and required no repayment vehicle check at that time), sent regular annual statements clearly indicating the interest only status and Mr B's responsibility to arrange repayment, and sent these statements to the addresses Mr B requested. The 2012 repossession resulted from Mr B's failure to transfer his direct debit when switching accounts, not a bank error. The ombudsman found no evidence supporting Mr B's claims of an agreed £200 monthly arrangement or that he was told the mortgage would be repaid by end of term. Mr B had a contractual obligation to monitor his account and ensure payments were made. The balance increase resulted from unpaid interest and fees during periods when Mr B made no payments. Legal action in 2025 was reasonable as the term had ended without an agreed repayment plan.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website