Partially upheld: Service failures generally complaint against Barclays Bank UK PLC

Decision detail

Summary

Mrs E complained that Barclays refused her application for additional borrowing at the last stage, after she had already committed to home improvement work. She had informed Barclays in May 2024 that she had built an annex onto her property which was being let out on an Assured Shorthold Tenancy (AST), and raised this issue again in July 2025 during her lending application. Despite this knowledge and its policy against lending on properties with ASTs, Barclays continued processing the application and provided written underwriter approval before refusing the lending. The ombudsman found that while Barclays was entitled to refuse the lending, it should have communicated this decision immediately rather than pursuing the application for several weeks, and should have confirmed the reason in writing rather than leaving Mrs E concerned about her finances. The ombudsman awarded £300 compensation for the inconvenience and distress caused by the poor handling of the application.

The Ombudsman's reasoning

The ombudsman found that while Barclays was entitled to refuse additional lending due to the annex being let on an AST (as this creates complications for mortgage security), the bank should have communicated this decision much earlier. Mrs E had clearly informed Barclays about the annex in 2024 and raised it again in July 2025, yet Barclays continued processing the application and provided written approval before refusing it. This caused Mrs E unnecessary inconvenience over several weeks, including completing detailed financial information, receiving approval then rejection, and having to complain to discover the actual reason for refusal. The ombudsman classified this as repeated small errors with impact lasting several weeks, warranting compensation at the top end of that category.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website