Not upheld: early repayment charge dispute on mortgage redemption complaint against Lloyds Bank PLC

Decision detail

Summary

Mr A complained that Lloyds Bank PLC refused to allow him to redeem his mortgage without paying an early repayment charge (ERC) after Lloyds closed his bank accounts following a relationship breakdown. Mr A argued that without access to Lloyds accounts, he could not pay his mortgage. The ombudsman found that the mortgage and bank accounts were separate products, and the closure of accounts did not obligate Lloyds to waive the contractually agreed ERC. The ombudsman noted Mr A could have opened an account with another provider and that the ERC terms were clearly set out in the mortgage offer. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that the mortgage and bank accounts were separate products, and closure of one did not obligate Lloyds to waive the ERC on the other. Mr A could have opened an account with another provider to continue mortgage payments. The ERC was clearly documented in the mortgage offer and was validly applicable until 20 April 2026. The closure of accounts, for which notice was given, did not prevent Mr A's ability to make mortgage payments.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website