Not upheld: unfair interest rates and charges on mortgage porting complaint against Clydesdale Bank Plc trading as Virgin Money

Decision detail

Summary

Mr and Mrs W complained that Virgin Money unfairly refused to offer them a more favourable interest rate when porting their mortgage and charged them a valuation fee, despite applying via an intermediary. Virgin Money offered them a 4.59% rate for additional borrowing while new customers could access 4.45%, and charged a valuation fee whereas new customers received free valuations. The ombudsman found this treatment fair, as Virgin Money reasonably offered different rates and benefits to new customers versus existing customers taking further borrowing on ported mortgages, and the rates were competitive in the market. Mr and Mrs W could have accessed lower rates by taking a completely new mortgage, but this would have required paying an early repayment charge of approximately £4,000. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found it reasonable for Virgin Money to offer different interest rates to different customer groups (new customers versus existing customers porting mortgages), as it is not unreasonable for a lender to prioritise attracting new business when setting rates. The rates offered to porting customers were only slightly higher than new customer rates and were competitive in the market. Mr and Mrs W had the option to access lower new customer rates by applying for a completely new mortgage, but this would have required paying an early repayment charge, so they could not have both benefits. Similarly, charging a valuation fee for porting mortgages while offering free valuations for new mortgages was reasonable as an incentive to attract new business, and Mr and Mrs W had already benefitted from a free valuation on their original mortgage. The firm clearly disclosed that free valuations were not available on porting cases.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website