Not upheld: Mortgage administration / arrears handling complaint against United Trust Bank Limited

Decision detail

Summary

R, a limited company, borrowed £726,500 on a one-year commercial bridging loan from UTB secured over a property under development. When the loan matured in April 2024, the build was incomplete and R could not repay. UTB granted a six-month extension, but R remained unable to repay at the end of that period. After lengthy discussions, R obtained an agreement in principle from another lender for most of the amount owed, but the lender ultimately offered less, creating a shortfall of approximately £22,000. UTB refused to accept the shortfall or release its security without full repayment. When R failed to repay, UTB appointed receivers in August 2025. R complained that UTB had treated it unfairly by rejecting viable repayment proposals, continuing to charge interest, and failing to account for circumstances outside its control. The ombudsman found the complaint not upheld, determining that UTB was entitled to require full repayment of the commercial loan and that the delays were caused by building control issues, not UTB's actions.

The Ombudsman's reasoning

The ombudsman found that this was unregulated commercial lending to a limited company, so Consumer Duty and regulatory principles did not apply. UTB was entitled to require full repayment of the capital and interest borrowed. The delays in obtaining building control sign-off were caused by legitimate concerns about the development's quality and compliance, not by UTB's actions. UTB's refusal to accept a shortfall or release its security without full repayment was reasonable and fair. The appointment of receivers after the loan had been outstanding for over two years and ten months past the extended term was a reasonable course of action. The ombudsman was not persuaded that UTB caused unreasonable delay, was unclear about its position, or failed to give fair consideration to R's proposals.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website