Not upheld: Mortgage administration / arrears handling complaint against Santander UK Plc

Decision detail

Summary

L, a limited company, complained that Santander failed to correctly implement a 6-month interest-only repayment holiday on its Bounce Back Loan under the PAYG scheme, resulting in three full repayments being taken in error between March and May 2025. After Mr S made repeated contact, Santander acknowledged the technical error, backdated the PAYG arrangement to March 2025, refunded £589.75 in overpayments, and paid £400 compensation. Mr S remained dissatisfied, arguing the refund was incomplete and that L should receive a restarted six-month relief period. The ombudsman found that Santander's corrective action was fair and appropriate, effectively providing L with the intended six months of interest-only payments, and that the £400 compensation was commensurate with the inconvenience and disruption caused to the business.

The Ombudsman's reasoning

The ombudsman acknowledged that Santander made an error but found that the firm's corrective action was appropriate. By backdating the PAYG arrangement and refunding the overpayments, Santander effectively returned L to the position it should have been in had the error not occurred - receiving six months of interest-only payments from March to August 2025. The ombudsman rejected the argument that the period should restart from June 2025, as this would provide L with more than the six months allowed under the scheme. The £400 compensation was found to be fair given the inconvenience and disruption caused to the business, the delay in resolution, and the need for repeated contact. The ombudsman noted that while the account showed strong credit balances throughout and no material cashflow difficulty, the temporary loss of use of funds and operational disruption justified the compensation amount.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website