Not upheld: mortgage term extension - affordability assessment and lending policy application complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr R and Mrs R complained that HSBC unfairly declined their application to extend the term of their interest-only mortgage from July 2026 by approximately five years. HSBC declined based on affordability, as the evidenced income (from tax returns showing two years of data) fell significantly below its £75,000 minimum annual income requirement, despite Mr R's claims of substantial investment returns and the couple's significant savings and investments. Mr R argued that HSBC applied a blanket policy without considering their individual circumstances, assets, and investment strategy, and claimed the decision breached the Equality Act 2010 due to age discrimination. The ombudsman found that HSBC was entitled to apply its standard affordability assessment criteria and that Mr and Mrs R have sufficient assets to repay the mortgage without financial hardship before the agreed term expires, making a term extension unnecessary. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that HSBC was entitled to carry out an affordability assessment under MCOB 11.6.5 to 11.6.19 and was fair in applying its standard lending policies and criteria. While HSBC could have considered alternative provisions for high net worth customers (MCOB 11.6.34-11.6.38), it was not obliged to do so. The ombudsman noted that Mr and Mrs R have sufficient assets to repay the mortgage without financial hardship before the term expires in July 2026, making a term extension unnecessary. The ombudsman rejected arguments that HSBC applied age discrimination or unfairly excluded non-employment income, finding that HSBC's requirement for evidence of income was fair and reasonable. The ombudsman also found it was fair for HSBC to request documents in original, unaltered format.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website