Not upheld: administrative error in payment calculation and system update failure complaint against HSBC UK Bank Plc

Decision detail

Summary

Miss B and Mr L complained that HSBC made errors with their mortgage payments, causing them to underpay by approximately £4,500 over 18 months after taking out a new interest rate product in early 2024. HSBC's systems failed to update with the new monthly payment amount, and the direct debit continued collecting the lower pre-switch amount. Miss B discovered the error in June 2025 when the mortgage balance began increasing. HSBC corrected the error by adjusting the account to show it as up to date (funding the underpayments itself) and correcting the monthly payments from September 2025 onwards, along with £500 compensation. Miss B requested that HSBC honour the lower payments for the remainder of the term, but the ombudsman rejected this, finding HSBC's remedial steps fair and the correct higher payments necessary to ensure the mortgage is repaid by the end of term.

The Ombudsman's reasoning

The ombudsman found that HSBC's error was clear and resulted in significant underpayments of approximately £4,500. However, HSBC's remedial steps were fair and reasonable: it adjusted the account to show it as up to date by funding the underpayments itself, and corrected the monthly payments going forward. The ombudsman rejected the request to allow continued underpayments, as the correct higher payments were those agreed to in the product switch and are necessary to ensure the mortgage is repaid by the end of the term. The ombudsman noted that allowing underpayments would either leave the mortgage balance increasing or require HSBC to apply a lower interest rate not generally available to customers. The £500 compensation was deemed fair given the upset caused, particularly as the error was discovered when Miss B was planning to take extended leave.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website