Partially upheld: unfair charges and lender conduct - improper payment of disputed service charges without adequate opportunity for borrower to respond complaint against Bank of Scotland plc

Decision detail

Summary

Mr Z complained that Bank of Scotland unfairly paid approximately £17,000 in disputed service charges claimed by his leasehold property's freeholder and added the cost to his mortgage. Bank of Scotland had written to Mr Z with a three-week deadline to respond but Mr Z was overseas and did not receive the letters before payment was made. The ombudsman found Bank of Scotland should not have made the payment as there was no imminent risk of lease forfeiture and the deadline was unreasonably short. However, the ombudsman could not order a full refund without court/tribunal determination that the amounts were not owed. Bank of Scotland was ordered to pay £250 compensation for the upset caused by its unfair conduct.

The Ombudsman's reasoning

Bank of Scotland should not have made the payment to the freeholder because forfeiture of the lease was not a genuine imminent risk - no court or tribunal had determined a breach, and legal proceedings had not been commenced. The three-week deadline given to Mr Z was unreasonably short given communication was by post and Mr Z was overseas. Bank of Scotland should have made more effort to contact Mr Z or allowed more time to respond. However, a full refund cannot be ordered without court/tribunal determination of whether the amounts were actually owed, as the payment was made before the complaint reached the ombudsman. Compensation is appropriate for the upset caused by the unfair conduct.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website