Not upheld: Account administration errors complaint against Tandem Bank Limited

Decision detail

Summary

Mrs W complained to Tandem Bank Limited about how a fixed sum loan for solar panels was being administered, specifically regarding an unexpected 'debit interest' charge and the slow reduction of the capital balance (only £300 reduction in year one instead of the expected £1,500). She felt misled as the loan agreement did not clearly explain that interest would be calculated daily on the outstanding balance. The ombudsman reviewed the loan agreement and found it clearly set out the 11.9% Annual Percentage Rate, daily interest calculation, and Mrs W's right to make early repayments. The ombudsman confirmed that Mrs W was paying both interest and capital, and that early repayments would reduce the total interest payable. The complaint was not upheld as Tandem was administering the loan in accordance with its terms and conditions.

The Ombudsman's reasoning

The ombudsman examined the loan agreement and found that it clearly sets out the Annual Percentage Rate of 11.9%, that interest is calculated daily on the outstanding balance, and that Mrs W has the right to make early repayments. The capital balance reduction of £300 in year one is consistent with how fixed sum loans work, with capital reduction accelerating over time as less interest is applied. The ombudsman confirmed that Mrs W is not only paying interest but also paying down capital, and that early or lump sum repayments would reduce the total interest payable by reducing the daily balance on which interest is calculated.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website