Not upheld: lending decision and mortgage application handling; communication and service quality complaint against Newbury Building Society

Decision detail

Summary

Mr and Mrs B complained to the FOS about Newbury Building Society's handling of multiple mortgage applications between 2023 and 2025 to convert their mortgage to interest-only and consolidate additional unsecured debts. They alleged NBS advised them to break a car lease agreement, failed to notify them of changed LTV requirements, made errors in implementing the interest-only conversion in June 2025, failed to make reasonable adjustments for Mr B's neurodivergence and their financial vulnerability, and breached confidentiality. NBS partially upheld the complaint, acknowledging poor communication about the July 2025 payment and paying £250 compensation. The ombudsman found NBS's lending decisions were fair given legitimate affordability concerns, did not find evidence NBS directed them to exit the car lease, found no obligation to proactively notify of criteria changes, and rejected the confidentiality and reasonable adjustments claims as the ombudsman determined NBS could not assume what adaptations were needed without Mr B's input and reasonable adjustments do not require lending where affordability concerns exist.

The Ombudsman's reasoning

The ombudsman applied principles of fair and reasonable lending, noting that lenders must consider the wider picture of affordability and sustainability, not just whether monthly payments can be met on paper. NBS's concerns about the level and nature of unsecured debt were reasonable, particularly as debts had accumulated from normal expenditure despite Mr and Mrs B's 2023 assurances they were not in financial difficulties. The ombudsman found NBS was entitled to require evidence of improved finances before lending further. Regarding the car lease, the ombudsman reviewed the phone recordings and found NBS used the car lease as an example of required spending reductions, not a directive to exit it; Mr and Mrs B's own June 2025 application described the decision to exit as 'considered' and referred to 'guidance' rather than instruction. The ombudsman found no obligation for NBS to proactively notify customers of lending criteria changes, and noted Mr and Mrs B benefited from the changed criteria when they applied. On vulnerability and reasonable adjustments, the ombudsman held that while NBS should have prompted discussion about Mr B's disability needs, it could not assume what adaptations were required without his input, and reasonable adjustments do not require lending where affordability and sustainability concerns exist. The confidentiality concern was rejected as corporate knowledge of concerns shared with one staff member is appropriately recorded and shared among relevant team members. The £250 compensation for poor communication about the July payment was found fair and proportionate.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website