Partially upheld: wrongful fraud marker reporting and mortgage application decline complaint against Nationwide Building Society

Decision detail

Summary

Mrs K and Mr S applied for a mortgage with Nationwide Building Society, which initially issued an offer but subsequently declined the application and reported a fraud marker to SIRA without informing them. After discovering the marker, a second lender also declined their application, and they were forced to accept a mortgage from a third lender at a significantly higher interest rate of 5.29% compared to the second lender's offered rate of 3.95%. Nationwide later accepted it had made a mistake in reporting the marker and removed it. The ombudsman upheld the complaint regarding the wrongful marker reporting but rejected claims for financial compensation, finding insufficient evidence that the marker caused the second lender's decline, as different lenders have different lending criteria. The ombudsman awarded £350 compensation for distress and inconvenience.

The Ombudsman's reasoning

While Nationwide's reporting of the fraud marker was accepted as a mistake and has been removed, the ombudsman could not establish that the marker was the definitive reason for the second lender's decline. The second lender's communications did not clearly confirm the marker caused the rejection, and different lenders have different lending criteria and risk appetites. The fact that a third lender offered a mortgage despite the marker does not prove the second lender would have lent without it. Therefore, no financial loss can be fairly attributed to Nationwide. However, the distress and inconvenience caused by discovering the marker and having to complain to have it removed warrants compensation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website