Not upheld: treatment during arrears, forbearance decisions, appointment of LPA Receivers, interest rate fairness complaint against Pepper (UK) Limited

Decision detail

Summary

Mrs G complained about Pepper's treatment of her buy-to-let mortgage, including interest rates applied, forbearance decisions, and the appointment of LPA Receivers. The mortgage had been in arrears since 2019 with approximately £66,000 owed by September 2025, and the last arrears payment was in May 2023. The ombudsman found the interest rates were contractually compliant, Pepper's refusal to capitalise arrears was justified given unaffordability concerns, and the appointment of LPA Receivers was reasonable given the six-year arrears history with no signs of improvement. The complaint was not upheld, and the ombudsman clarified that LPA Receivers' actions fall outside the service's jurisdiction.

The Ombudsman's reasoning

The ombudsman applied a balance of probabilities test and considered the broader context of the mortgage history. The interest rates charged were consistent with the mortgage contract terms and Pepper's status as a closed lender. Given the six-year arrears history, rising arrears amount, lack of improvement, and income/expenditure analysis showing unaffordability, Pepper's decision not to offer capitalisation of arrears and to appoint LPA Receivers was justified. The ombudsman noted that once LPA Receivers were appointed, their actions fell outside the service's jurisdiction as they act for Mrs G, not Pepper, with no evidence of Pepper controlling or influencing them.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website