Not upheld: continued collection of payments after loan term ended; alleged unfair treatment regarding loan repayment complaint against Elderbridge Limited

Decision detail

Summary

Mr and Mrs J took out a 20-year secured loan in 2004 and experienced periods of arrears, resulting in accumulated fees and interest charges. Although initially told the loan would be cleared by term end if payments were maintained, Elderbridge informed them in 2020 that this was no longer the case and that higher payments were required. Despite repeated notifications in 2020, 2023, and 2024 that their payments were insufficient and recommending they contact Elderbridge to discuss the situation, Mr and Mrs J did not increase payments or engage further. When the loan term ended in 2024, approximately £3,700 remained outstanding. The ombudsman found Elderbridge acted fairly in continuing to collect this legitimate debt.

The Ombudsman's reasoning

The ombudsman found that when loans fall into arrears, the balance does not reduce as originally expected, resulting in higher interest charges that compound if unpaid. Although Mr and Mrs J were told at times that their loan was on track, they were clearly informed in 2020 and repeatedly thereafter that this was no longer the case and that they needed to increase payments. The 2014 letter only promised fees would be repaid, not the entire balance. Elderbridge made clear in 2023 and 2024 that payments were insufficient and recommended contact to discuss the situation, which Mr and Mrs J did not pursue. The outstanding balance of approximately £3,700 at term end was legitimate debt owed by Mr and Mrs J.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website