Upheld: delayed loan redemption / failure to process redemption request / poor administration complaint against Target Servicing Limited
Financial Ombudsman decision DRN-6399886 of 2026-06-03T00:00:00+00:00. delayed loan redemption / failure to process redemption request / poor administration complaint against Target Servicing Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6399886 |
|---|---|
| Decision date | 2026-06-03T00:00:00+00:00 |
| Firm | Target Servicing Limited |
| Product | shared equity loan (Help to Buy scheme) |
| Claim type | delayed loan redemption / failure to process redemption request / poor administration |
| Outcome | Upheld |
| Remedy | Target must pay: (1) All interest and management fees from 1 July 2022 until redemption date (26 April 2023) plus 8% simple annual interest from each payment date to refund date; (2) The difference between what Miss G would have paid if redeemed on 30 June 2022 at £240,000 valuation versus what she paid on 26 April 2023 at £260,000 valuation, plus 8% simple annual interest from redemption date; (3) The difference between the full valuation fee paid (£380 on 20 March 2023) and the desktop valuation fee that should have been paid (£75 in May/June 2022), being £305 plus 8% simple annual interest from 20 March 2023; (4) £400 compensation for distress and inconvenience caused by the delay and poor communication. |
Summary
Miss G obtained a Help to Buy shared equity loan of £43,399 in November 2017 and decided to redeem it in 2022 using her savings. She submitted a complete redemption application on 7 March 2022, provided a RICS valuation on 1 May 2022, and paid the administration fee. Target confirmed on 10 May 2022 that the redemption request was being processed and would receive a quote within 5-7 working days, but then took no further action. Despite Miss G's chasing in November 2022, the loan was not redeemed until 26 April 2023, requiring her to obtain a new valuation at additional cost and pay unnecessary interest. The ombudsman upheld the complaint, finding Target had breached its duty to act fairly by failing to process a complete redemption request without reasonable grounds, and ordered compensation for the additional costs, interest, and distress caused.
The Ombudsman's reasoning
The ombudsman found that Target, as a regulated firm administering the loan on behalf of Homes England, had a duty to act fairly and comply with the lender's contractual obligations. Miss G had completed all her contractual obligations by obtaining a valuation, submitting the application form, paying the administration fee, and confirming her source of funds. The loan terms contained no provision for refusing or delaying redemption. Target's own email of 10 May 2022 confirmed it would provide a redemption quote within 5-7 working days, but this never happened. The ombudsman found no reasonable grounds for the delay and determined that had Target acted fairly and reasonably, the loan would have been redeemed by 30 June 2022 (accounting for minor delays caused by Miss G and her solicitor). The subsequent requirement for a new full valuation in 2023 was a direct result of Target's failure to process the redemption in 2022.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Target Servicing Limited, all decisions | 134 | 63% |
Source
Read the original decision on the Financial Ombudsman Service website