Not upheld: mortgage term extension refusal, interest-rate product availability, treatment during financial difficulty complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr B and Mrs H complained about a mortgage taken out with HSBC in 2006 and about HSBC's treatment when they experienced financial difficulty from 2022 onwards, specifically regarding HSBC's refusal to extend the mortgage term by five years or provide a new interest-rate product after the loans ended in April 2024. The ombudsman found the 2006 complaint was time-barred but considered the post-2022 complaints. The ombudsman concluded HSBC acted fairly by refusing the term extension (as it would have been unaffordable and the inheritance-based repayment strategy lacked certainty), by not offering shorter fixed-rate products (contrary to industry practice), and by providing reasonable support including flexible payments and approximately 17 months to sell the property. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied MCOB 13 requirements and the principle that lenders must treat customers in financial hardship fairly while balancing the lender's right to receive payment. The ombudsman found that HSBC's refusal to extend the term was reasonable because: (1) the mortgage terms did not require automatic term extensions; (2) the extension would have been unaffordable based on the complainants' income and expenditure; (3) the inheritance-based repayment strategy lacked certainty and credibility; and (4) a term extension would likely leave them in the same position without resolving the underlying problem. Regarding the interest-rate product, the ombudsman found it was reasonable for HSBC not to offer a fixed rate shorter than two years (standard industry practice) or to commit to a two-year deal when the mortgage term would expire before the product term ended, risking early repayment charges. The ombudsman concluded HSBC provided appropriate support including regular engagement, financial assessments, flexible payment arrangements, and approximately 17 months for the complainants to sell the property themselves.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website