Upheld: poor information provision during mortgage porting application process; failure to properly assess eligibility criteria complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr B and Miss G complained about HSBC's handling of their mortgage porting application. On 8 April 2025, Mr B called HSBC to ask whether his change from permanent employment to contracting would affect his ability to port his mortgage and borrow additional funds. The HSBC agent provided a DIP indicating they could borrow up to £750,000 and stated Mr B's employment would not be an issue. Relying on this information, Mr B and Miss G proceeded with accepting an offer on their property in May 2025 and making an offer on a new property in June 2025. However, when they submitted their full application in June 2025, HSBC determined that Mr B did not meet its eligibility criteria for fixed-term contract workers because his contract was only six months long and he had not met the minimum service requirements. The ombudsman upheld the complaint, finding that HSBC should have asked proper questions during the initial call to establish Mr B's ineligibility, but rejected the claim for ERC refund because Mr B and Miss G had the opportunity to withdraw from the transaction after the negative lending decision but chose to proceed.

The Ombudsman's reasoning

The ombudsman found that while a DIP is not a formal offer and does not guarantee approval, HSBC failed to ask the right questions during the initial call to properly establish Mr B's eligibility against its defined policy criteria. Had HSBC done so, Mr B would have been told during the initial call that he did not meet the minimum contract term requirements, rather than being left with the impression he qualified to apply. However, the ombudsman rejected the claim for ERC refund because: (1) Mr B and Miss G were not legally committed to the transaction when they received the negative lending decision on 17 June 2025; (2) they had the opportunity to withdraw from the transaction to avoid the ERC but chose to proceed; (3) they made the decision to proceed with full knowledge that HSBC would not lend; and (4) the ERC forms part of the contractual terms with HSBC. The ombudsman noted that while Mr B and Miss G felt morally obliged to honour their sale agreement, they had the ability to mitigate their loss but chose not to do so.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website