Partially upheld: Mortgage administration / arrears handling complaint against Bank of Scotland plc trading as Halifax

Decision detail

Summary

Ms B complained that Halifax paid ground rent charges and added legal costs to her mortgage balance without her consent, despite her dispute of the charges. Halifax had been informed of a freeholder's forfeiture action only 13 working days before a court hearing and paid the amount following a court consent order. The Ombudsman found Halifax's decision to pay was reasonable to protect the property and mortgage security, and the mortgage terms permitted adding these costs to the balance. However, Halifax failed to send the initial notification to Ms B's correct address and misled her about the ability to dispute the charge, warranting £100 compensation for poor service.

The Ombudsman's reasoning

The Ombudsman found that Halifax acted reasonably in paying the ground rent and legal costs to prevent forfeiture of the lease, as it had a duty to protect both its and Ms B's interests when informed late in the legal process. The mortgage terms and conditions permitted adding these amounts to the mortgage balance. However, Halifax made service errors by sending correspondence to the wrong address and failing to clearly explain to Ms B that a court order had been issued and payment was mandatory, which raised her expectations about disputing the charge. These service failures warranted compensation despite the underlying decision to pay being sound.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website