Not upheld: mortgage lending decision and alleged inappropriate instruction to repay debts complaint against National Westminster Bank Public Limited Company (NatWest)

Decision detail

Summary

Mr J and Mrs S complained that NatWest required them to repay £42,000 of personal debts before approving mortgage lending of £238,000, and that after they cleared these debts using life savings, NatWest only approved £266,366 (later resulting in a different application for £138,200 without a home move). They sought reimbursement of the £42,000 and compensation. NatWest denied instructing them to clear debts before approval and stated the debts were discussed as part of the application process. The ombudsman examined NatWest's internal notes and found no evidence that NatWest instructed the clearing of debts as a precondition for lending; rather, NatWest only asked for confirmation that declared debts would be cleared if lending was approved, and requested evidence only after Mr J and Mrs S stated they had already paid them. The ombudsman concluded the instruction to clear debts likely came from the broker, not NatWest, and declined to investigate the broker's role as that would require a separate complaint against the broker.

The Ombudsman's reasoning

The ombudsman carefully examined NatWest's internal notes and found that NatWest's requests regarding debts were not instructions to clear them immediately as a precondition for lending. The first point about the undeclared hire purchase was a request for evidence of clarification, not an instruction to pay. The second point about declared debts was a request for confirmation they would be cleared if lending was approved, not an immediate instruction. Critically, NatWest only requested evidence of debt repayment after Mr J and Mrs S stated they had already paid the debts. The ombudsman found no evidence that NatWest communicated any instruction to the broker to require debt clearance before approval. The instruction to clear £42,000 of debts appears to have come from the broker, not NatWest.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website