Not upheld: mortgage administration, post-term treatment, failure to repossess, lack of discussion regarding voluntary surrender of keys option complaint against Bank of Scotland plc
Financial Ombudsman decision DRN-6381527 of 2026-06-02T00:00:00+00:00. mortgage administration, post-term treatment, failure to repossess, lack of discussion regarding voluntary surrender of keys option complaint against Bank of Scotland plc. Outcome: Not upheld.
Decision detail
| Reference | DRN-6381527 |
|---|---|
| Decision date | 2026-06-02T00:00:00+00:00 |
| Firm | Bank of Scotland plc |
| Product | Mortgage |
| Claim type | mortgage administration, post-term treatment, failure to repossess, lack of discussion regarding voluntary surrender of keys option |
| Outcome | Not upheld |
| Remedy | No order or award made. The ombudsman expressed hope that further dialogue would take place between the parties to find a mutually-agreed way forward, and advised Mr and Mrs I that if they are pursuing a negative equity arrangement, they should engage with BOS on negotiating the agreement, with VSOK as a backup alternative if that fails. |
Summary
Mr and Mrs I complained about BOS's treatment of their buy-to-let mortgage after the term expired in 2016, raising concerns about lack of clarity regarding a property sale, delays in responding to solicitors, balance increases after the payment was set to £0 in 2018, failure to repossess the property (leaving them liable for Council Tax and insurance), and delayed discussion of the voluntary surrender of keys option. The ombudsman found that BOS acted fairly in allowing the borrowers latitude to find a solution rather than pursuing immediate recovery, that the accounting system quirk was not unfair as annual statements were provided, and that VSOK eligibility criteria were appropriately applied. The ombudsman concluded the complaint was largely driven by hindsight and that the borrowers' current situation resulted primarily from their own decisions and omissions over the ten years since the mortgage term expired.
The Ombudsman's reasoning
The ombudsman found that BOS's approach of allowing Mr and Mrs I latitude to find a solution rather than pursuing immediate recovery action was fair and reasonable, particularly as this reflected what the borrowers wanted at the time. The accounting system quirk that set the payment to £0 and prevented arrears accrual was not unfair because the borrowers received annual statements showing the debt was increasing and they were aware of the underlying position. The complaint was largely driven by hindsight, as evidenced by the borrowers' 2017 complaint about valuation suggesting they did not believe a 2016 sale would have cleared the debt. VSOK was not applicable while the property had a tenant or was on the market, conditions that only changed in late 2023 and 2024 respectively. The ombudsman emphasized that this was a commercial venture undertaken at the borrowers' volition with inherent risks, and their current situation is largely attributable to their own decisions and omissions over the ten years since the mortgage term expired.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Bank of Scotland plc, all decisions | 27,170 | 11% |
| Mortgage, all decisions | 25,315 | 22% |
Source
Read the original decision on the Financial Ombudsman Service website