Upheld: unfair decision-making / failure to conduct manual review / procedural unfairness in mortgage application decline complaint against West One Secured Loans Limited

Decision detail

Summary

Mrs M applied for a mortgage with West One Secured Loans Limited and paid £450 for a property valuation and £199 application fee. Before her identity was verified, she failed an automated identity verification check multiple times and requested a manual review, which West refused. West declined her application citing the repeated failed automated checks and Know Your Customer compliance issues. The ombudsman found that while West was entitled to verify identity, it made an unfair decision by rejecting the application without conducting the manual review Mrs M requested or investigating why the automated checks failed. West could not demonstrate what was actually wrong with her ID documentation, making it impossible to show the decision was fair. The ombudsman upheld the complaint and ordered West to refund both fees plus interest and pay £200 compensation, as Mrs M lost the opportunity to have her application fairly considered.

The Ombudsman's reasoning

The ombudsman found that while West was entitled to verify identity and decline lending, it made an unfair decision by rejecting Mrs M's application based on the number of failed automated verification attempts without conducting the manual review she requested. The ombudsman noted that ICO guidance suggests individuals have the right to request manual review of automated decisions with legal consequences. West could not demonstrate what specifically was wrong with Mrs M's ID documentation, and therefore could not show its decision was fair. The ombudsman concluded that West outsourced its ID checks to an automated third party and, when repeated attempts failed, made a decision not to lend without enquiring further into the reasons. This was not a fair and reasonable decision. While the ombudsman believed West would likely have declined the application if it had fairly reviewed it, Mrs M lost the chance of a successful application because West rejected it at an early stage without fair grounds. The ombudsman also found West made a mistake in charging fees and conducting valuation before successfully verifying identity.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website