Not upheld: Mortgage administration / arrears handling complaint against Barclays Bank UK PLC

Decision detail

Summary

Mr and Mrs D complained that Barclays incorrectly used their mortgage overpayments to reduce their monthly payment rather than the mortgage term as intended. Barclays accepted the error and offered to reverse it, but later stated it could not restore the original monthly payment due to interest rate changes, instead proposing that Mr and Mrs D set up standing orders for additional payments and offering £650 total compensation. The ombudsman found Barclays' mistake was clear but upheld its proposed remedy as fair, rejecting Mr and Mrs D's arguments that they should not need to take ongoing action to mitigate the error and that the compensation was inadequate.

The Ombudsman's reasoning

The ombudsman acknowledged Barclays made a clear mistake but found that while the firm could not restore the exact previous position due to legitimate reasons (interest rate changes), the proposed remedy was fair. The ombudsman considered that Mr and Mrs D benefit from the reduced payment and can mitigate any loss by setting up standing orders or direct debits. The ombudsman rejected the argument that customers should not need to take ongoing action, finding that amendments would only be necessary if interest rates change. The £650 total compensation was deemed fair to reflect inconvenience, stress, and Mrs D's vulnerability.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website