Upheld: unfair conduct in pursuing possession proceedings; failure to communicate about legal action complaint against Bank of Scotland plc trading as Birmingham Midshires

Decision detail

Summary

Mr and Mrs M complained about BM's pursuit of possession proceedings on their interest-only mortgage after the term ended in April 2022 with an outstanding balance of £430,000. While actively arranging a re-mortgage with evidence of progress (Decision in Principle and broker confirmation), BM instructed solicitors to seek a possession order in late April 2025, despite telling Mr and Mrs M on 28 March 2025 that a legal action review hadn't occurred. The complaint was upheld as BM failed to treat them fairly by not requiring a mortgage offer before proceeding with legal action. BM was ordered to refund legal costs incurred since April 2025 with interest and pay £500 compensation for distress, which the ombudsman found proportionate given the short timescale and quick adjournment of the hearing.

The Ombudsman's reasoning

BM was required to treat Mr and Mrs M fairly. Although MCOB section 13 and the Mortgage Pre-Action Protocol do not apply to post-term debt situations, BM still had a duty of fair treatment. BM should not have instructed solicitors to proceed with applying for a hearing date without first requiring a mortgage offer, given that Mr and Mrs M were actively pursuing re-mortgage options with evidence of progress. The shock of learning legal action had begun in late April 2025, after being told on 28 March 2025 that no review had occurred, caused distress. However, BM acted quickly to adjourn the hearing and the overall timescale was relatively short. The refund of legal costs is appropriate as they were incurred during the period when BM should have required a mortgage offer rather than proceeding with legal action.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website