Not upheld: alleged irresponsible lending and inadequate explanation of mortgage terms; missing signed mortgage agreement complaint against Barclays Bank UK PLC

Decision detail

Summary

L, a limited company, complained to Barclays about interest applied to its commercial mortgage taken out in 2011 for £146,000 over 25 years. The director claimed Barclays failed to explain how the mortgage worked and that interest and charges meant hardly any capital was paid off over 16 years. The complaint was raised in May 2025 when the mortgage was repaid for under £88,000. The Ombudsman found that Barclays applied interest in accordance with the mortgage terms and conditions, which clearly set out daily interest calculations added quarterly. The mortgage balance reduction of approximately 40% after 14 years was consistent with expected repayment patterns, particularly given missed payments from 2019. The Ombudsman upheld Barclays' £400 compensation offer for service failures but found no evidence of mis-selling or improper interest application.

The Ombudsman's reasoning

The Ombudsman found that Barclays applied interest strictly in accordance with the mortgage terms and conditions. The mortgage balance reduction of approximately 40% after 14 years of a 25-year term was consistent with expected repayment patterns for mortgages, particularly given missed payments. The daily interest charge of approximately £17.80 was the total daily interest being charged, not additional interest. The director's concerns about the mortgage balance increasing between January and May 2025 were unfounded, as the balance had actually decreased from approximately £91,000 to under £88,000. The information provided at the time of application clearly explained that interest would be calculated daily and added quarterly. Monthly statements provided breakdowns of interest charged and calculations.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website