Not upheld: Irresponsible lending complaint against Handelsbanken plc

Decision detail

Summary

Mr and Mrs S complained that Handelsbanken should have treated their secured loans as regulated mortgage contracts and failed to conduct proper affordability assessments, agreeing to unaffordable loans with no suitable repayment strategy. The loans totalled approximately £3,400,000 initially, secured against a property valued at £9,000,000, with additional borrowing in 2016 and restructuring in 2017. The ombudsman found the loans should indeed have been treated as regulated but concluded that Handelsbanken completed satisfactory assessments treating Mr and Mrs S as high-net-worth customers with net assets exceeding £9,000,000. The ombudsman found the repayment strategy based on property sale was appropriate given the substantial remaining equity, and that Mr and Mrs S had multiple alternative income sources including pensions, savings, and rental income. The complaint was not upheld as the ombudsman found no evidence of unfair or unreasonable conduct.

The Ombudsman's reasoning

The ombudsman found that although Handelsbanken failed to treat the loans as regulated mortgage contracts, this did not result in unfair treatment. The ombudsman applied the regulatory framework retrospectively and concluded that Handelsbanken's assessments would have been satisfactory even under regulated lending standards. The ombudsman relied on Handelsbanken's contemporaneous records as more reliable than the complainants' recollections, particularly regarding the stated intention to sell other properties. The ombudsman found that Mr and Mrs S qualified as high-net-worth customers entitled to tailored affordability assessments, and that Handelsbanken properly considered their substantial net assets, multiple income sources, pension provisions, and alternative repayment options. The ombudsman rejected the argument that relying on property sale was inappropriate, finding that sufficient equity would remain for Mr and Mrs S to purchase a cheaper property after repayment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website