Not upheld: inadequate forbearance support and credit file reporting during temporary financial difficulties complaint against Coventry Building Society

Decision detail

Summary

Ms H and Mr S complained that CBS failed to provide adequate support during 2024-2025 when they were forced to relocate due to a dangerous property situation and could not afford both their mortgage and rental accommodation. They claimed CBS should have offered alternative forbearance options, made them aware of credit file consequences, and provided a manager callback to discuss their situation. The ombudsman found that CBS appropriately explored options with the borrowers, agreed to reduced payments initially, and accepted no payments when the borrowers demonstrated inability to pay. CBS was entitled to require documentation about the insurance claim and council position before making further decisions. The ombudsman rejected the argument that CBS should have prevented credit file damage, as lenders must report accurate arrears information. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that CBS was required to explore ways to support borrowers in financial difficulties, but this did not mean providing whatever the borrowers requested. CBS appropriately discussed options with Ms H and Mr S and agreed to reduced payments initially, then accepted no payments when the borrowers demonstrated they could not afford any payments. The ombudsman noted that CBS could not have offered an interest-only arrangement as Mr S stated this was unaffordable. CBS was entitled to require information about the insurance claim and council position before making further decisions, and was not unreasonable in concluding that once the insurer paid the rent, the borrowers could afford the mortgage. The ombudsman found that CBS was required to report accurate arrears information to credit reference agencies, and that the borrowers' credit file damage was a consequence of the arrears themselves, not CBS's failure to support them. The ombudsman rejected the suggestion that speaking to a manager earlier would have prevented credit file damage, as arrears would still have required reporting.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website