Not upheld: mortgage variation - refusal to remove joint borrower complaint against Bank of Scotland plc trading as Halifax

Decision detail

Summary

Mr S complained that Halifax unfairly refused to remove his former wife as a joint borrower following a matrimonial court order in divorce proceedings. Halifax declined the request on affordability grounds, citing uncertainty about Mr S's employment and income. The ombudsman found that removal of a joint borrower is a material change to mortgage terms, entitling Halifax to conduct an affordability assessment under FCA regulations. Although lenders can waive such assessments, they are not obliged to do so, and Halifax's concerns about becoming solely reliant on Mr S's income were legitimate and reasonable. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that removal of a joint borrower constitutes a material change to mortgage terms, making it reasonable for Halifax to conduct an affordability assessment. The FCA's MCOB rules allow lenders to require affordability assessments for material changes, and while lenders can waive such assessments, they are not obliged to do so. Given the uncertainty about Mr S's employment and income at the time, Halifax had legitimate commercial concerns about becoming solely reliant on one borrower. The ombudsman noted that Halifax's willingness to reconsider if Mr S's circumstances improved was fair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website