Upheld: irresponsible lending decision / unfair refusal to lend based on incorrect information complaint against M
Financial Ombudsman decision DRN-6229100 of 2026-05-01T00:00:00+00:00. irresponsible lending decision / unfair refusal to lend based on incorrect information complaint against M. Outcome: Upheld.
Decision detail
| Reference | DRN-6229100 |
|---|---|
| Decision date | 2026-05-01T00:00:00+00:00 |
| Firm | M |
| Product | commercial loan, mortgage, overdraft |
| Claim type | irresponsible lending decision / unfair refusal to lend based on incorrect information |
| Outcome | Upheld |
| Remedy | HSBC UK Bank Plc must pay M: (1) £23,117 as a refund of arrangement fees for bridging loans (the difference between fees actually paid and fees that would have been paid on a £750,000 HSBC loan); (2) the difference in interest paid on bridging loans versus what they would have cost at 4.29% over Base Rate; (3) the difference in interest paid on the Roof Loan and CBIL from their repayment date to the First Loan repayment date; (4) interest at 8% per year simple on the above sums from the date charged to the date refunded; (5) £1,000 for inconvenience. |
Summary
M, a company with existing HSBC borrowing, requested a £750,000 loan in early 2023 but HSBC offered only £640,000, requiring repayment of existing loans totalling £415,000. This forced M to take expensive bridging loans from alternative lenders at rates up to 22.68% per annum. In late 2024, M discovered HSBC's refusal was based on incorrect information in a valuation report that the bank had failed to provide when requested. HSBC accepted the error and later provided a refinancing loan in April 2025. The ombudsman upheld the complaint, ordering compensation for losses between April 2023 and April 2025 (including refund of arrangement fees and interest differentials) but declining to compensate for losses after April 2025, as M's directors chose to extend the loan term when refinancing.
The Ombudsman's reasoning
The ombudsman aimed to put M in the position it would have been in if HSBC had made no errors. For the period April 2023 to April 2025, the ombudsman found M would not have taken the bridging loans if it had received the full £750,000 from HSBC and not been required to repay the Roof Loan and CBIL. Therefore, HSBC should refund the excess interest paid on those bridging loans compared to what a £750,000 HSBC loan would have cost, plus the difference in interest rates between the First Loan and the Roof Loan/CBIL. However, from April 2025 onwards, the ombudsman declined to award compensation because M's directors chose to extend the loan term when taking the New Loan, and it is impossible to know what M would have done in April 2025 if no errors had occurred. The New Loan prevented further losses from that date onwards.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| M, all decisions | 1 | 100% |
Source
Read the original decision on the Financial Ombudsman Service website