Not upheld: unfair loan terms, poor service, misleading information from Relationship Manager complaint against National Westminster Bank Plc (NatWest)

Decision detail

Summary

S, a company, complained that NatWest unfairly provided a loan agreement in principle that did not match terms allegedly discussed with the bank's Relationship Manager. S had sought an interest-only loan for approximately £556,000 since November 2020 to replace a more expensive loan with another lender. NatWest's sanctioning team would only approve £440,000 on a repayment basis and £106,000 on an interest-only basis, but the Relationship Manager provided misleading reassurances that the full interest-only loan had been approved, causing S significant inconvenience and additional costs. When NatWest finally provided an agreement in principle, it was on a capital repayment basis at 6.8% fixed rate rather than the interest-only terms S claimed to have discussed. The ombudsman found that while NatWest's service was poor, the bank was entitled to make a commercial decision not to offer the requested terms, and the agreement in principle offered was fair and reasonable. The complaint was not upheld, though NatWest's £1,400 compensation for inconvenience was acknowledged as appropriate.

The Ombudsman's reasoning

The ombudsman acknowledged that NatWest's service was poor and the Relationship Manager provided misleading information, causing inconvenience to S. However, the ombudsman found that it would not be fair to direct NatWest to provide loan terms it had never sanctioned, as lending criteria are within a business's commercial discretion and the ombudsman cannot interfere with them unless fundamentally unfair. The ombudsman found that different loan options were discussed with S, contrary to S's assertion that only interest-only terms were discussed. The ombudsman could not determine what fixed rate would have been offered in September 2022 based on available evidence, but found the 6.8% rate offered was not demonstrably unfair. The valuation figures requested were reasonable given the lack of updated valuations since 2009. The £1,400 compensation already paid was in line with what the ombudsman would recommend.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website