Not upheld: early repayment charge application and timing of payment processing complaint against Barclays Bank UK PLC

Decision detail

Summary

Mr H complained that Barclays unfairly applied an early repayment charge (ERC) of approximately £1,250 when he repaid his mortgage on 28 August 2025, four days before the ERC would have expired on 30 September 2025. Mr H had requested a redemption statement for 1 September 2025 and sent the funds by CHAPS transfer, expecting them to be applied on that date, but the payment arrived on 28 August 2025 and Barclays applied it immediately, triggering the ERC. Mr H argued he lacked sufficient information about the redemption process and that it was unfair to expect him to predict bank transfer timing. The ombudsman found no error or unfair treatment, noting that the ERC terms were clearly disclosed, a redemption statement is not an instruction to redeem on a particular date, and Barclays did not tell Mr H it would hold the payment for later application. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Barclays did not mislead Mr H or act unfairly. The product offer and annual statement clearly stated the ERC applied until 30 September 2025. A redemption statement is not an instruction to redeem on a particular date, merely a statement of the cost on that date. Mr H made the payment on 28 August 2025 of his own volition; Barclays did not instruct him to do so or tell him it would hold the payment for application on 1 September 2025. Barclays' practice of applying payments on the date received is fair and standard. Mr H could have avoided the ERC entirely by making any payment during September 2025, and could have called Barclays if unsure about timing. The ombudsman rejected the argument that the ERC was unfair or disproportionate given it was only a few days early, as the terms were clearly agreed.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website