Partially upheld: unfair removal of mortgage offset facility complaint against Leeds Building Society
Financial Ombudsman decision DRN-6275105 of 2026-05-28T00:00:00+00:00. unfair removal of mortgage offset facility complaint against Leeds Building Society. Outcome: Partially upheld.
Decision detail
| Reference | DRN-6275105 |
|---|---|
| Decision date | 2026-05-28T00:00:00+00:00 |
| Firm | Leeds Building Society |
| Product | mortgage |
| Claim type | unfair removal of mortgage offset facility |
| Outcome | Partially upheld |
| Remedy | Leeds Building Society must honour its settlement offer: (1) Allow Mr and Mrs W to retain the offset savings account and offset against the mortgage balance until 30 June 2027; (2) From 1 July 2027 until the end of the mortgage term on 15 April 2028, reduce the interest rate to 0% provided Mr and Mrs W maintain current payments and do not fall into arrears; (3) On 1 July 2027 transfer the savings balance to an instant access account. |
Summary
Mr and Mrs W complained that Leeds Building Society unfairly removed the offset savings account linked to their 2008 interest-only mortgage, which they relied upon given their lack of income. Leeds closed the account due to system platform migration and offered a settlement providing offset retention until June 2027, followed by a 0% interest rate until mortgage end in April 2028. The ombudsman found the removal unfair but upheld the settlement offer as fair, as it placed Mr and Mrs W in a better position than continued offset would have. The ombudsman rejected their claim for losses from share sales, finding this was their independent decision made without informing Leeds of their changed repayment plans.
The Ombudsman's reasoning
The ombudsman found it was unfair for Leeds to remove the offset facility entirely, as it was a significant feature of the mortgage that Mr and Mrs W were obliged to take. However, the ombudsman accepted Leeds' legitimate business reason (system platform migration) and could not reasonably require continuation of the offset facility. The settlement offer was deemed fair because it provides Mr and Mrs W with a better position than if the offset had continued: they receive a 0% interest rate from July 2027 onwards (equivalent to full offset) plus the ability to earn interest on their savings. Regarding the share sales, the ombudsman found Mr and Mrs W's decision to sell shares was their own responsibility, as Leeds was unaware of this plan and had already offered time to pursue their stated option of selling another property. The ombudsman noted Mr and Mrs W should have informed Leeds of their changed plans.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Leeds Building Society, all decisions | 533 | 25% |
Source
Read the original decision on the Financial Ombudsman Service website