Not upheld: incorrect redemption figure and addition of legal fees complaint against Bank of Scotland plc trading as Birmingham Midshires

Decision detail

Summary

Mr and Mrs R complained about an incorrect redemption statement sent by Birmingham Midshires on 15 July 2025 showing £8,027.13 instead of £80,677.13, and the addition of legal fees to their mortgage balance. The mortgage term had ended in March 2022 with an outstanding balance of approximately £210,000, and legal action was commenced in June 2024. Birmingham Midshires offered £300 compensation, which an investigator found fair and reasonable. The ombudsman upheld this decision, finding that while the firm should have notified Mr and Mrs R of the error, the addition of legal fees was justified as legal work had already commenced before the incorrect statement was issued and the mortgage remained outstanding after the term ended. The ombudsman concluded that £300 was fair compensation for the distress and inconvenience caused.

The Ombudsman's reasoning

The ombudsman agreed with the investigator that while Birmingham Midshires made an error in sending an incorrect redemption statement and should have notified Mr and Mrs R of the error, the firm was not unreasonable in its actions. The ombudsman found that legal action was justified because the mortgage term ended in 2022 and the balance remained outstanding, and that legal fees were properly added under the mortgage terms and conditions. The ombudsman rejected the argument that legal fees should not have been added because of the incorrect redemption statement, as legal work had already commenced before the statement was issued. The ombudsman concluded that £300 compensation was fair and reasonable for the distress and inconvenience caused.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website