Not upheld: technical error preventing product transfer; system failure on mortgage sub-account complaint against Bank of Scotland plc trading as Halifax

Decision detail

Summary

Mr K and his father complained that a technical error on their Halifax mortgage account prevented them from transferring to a different product from December 2021 onwards. The error involved a 5p arrears/credit discrepancy across sub-accounts that blocked online product transfers. Halifax acknowledged the error and reconstructed the account, refunding £27,305.47 in overpayments, paying £3,462.90 in interest, and offering £750 for distress and inconvenience. Mr K disputed this was insufficient, claiming he had been trying to switch products since 2011 and that the error prevented him from restructuring his mortgage. The ombudsman found no evidence of prior transfer attempts and upheld Halifax's offer as fair, noting Mr K was arguably in a better position than had he actually switched in December 2021.

The Ombudsman's reasoning

The ombudsman found that although Halifax's technical error was genuine and acknowledged, the financial compensation offered was fair because: (1) Halifax put Mr K in the position he would have been in had he applied for a product transfer in December 2021, even though there was no evidence he had attempted to do so; (2) the lowest available rates were applied, and Mr K was arguably in a better position than if he had actually changed rates in December 2021; (3) simple interest was correctly applied in line with FOS approach; (4) the £750 for distress and inconvenience was appropriate given the three-year error period and financial stress, though health issues could not be directly attributed to the error and were not communicated to Halifax.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website