Not upheld: mortgage application decline / unfair lending decision complaint against National Westminster Bank Public Limited Company

Decision detail

Summary

Miss C and Mr J complained that NatWest unfairly declined their mortgage application in July 2024, forcing them to obtain a mortgage elsewhere and pay an early repayment charge on Miss C's existing NatWest mortgage. NatWest cited a failed credit score due to a financial association with Mr M, Miss C's former partner who had been removed from the mortgage account 18 months earlier. The ombudsman found NatWest was not at fault because Miss C's requests to remove the association were made after the credit search, and NatWest's internal records showed the application would have been declined on affordability grounds anyway, as the maximum affordable loan was £217,965.22 compared to the £355,000 requested. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that NatWest was not at fault because: (1) the financial association with Mr M would have remained on Miss C's credit file as she did not file Notices of Disassociation before the application, and her requests to remove it were made after NatWest's credit search; (2) even if the association had been removed, the application would have been declined on affordability grounds as NatWest's lending criteria permitted a maximum loan of £217,965.22, significantly below the £355,000 requested; (3) a Decision in Principle is not a binding commitment and is explicitly conditional on passing full lending criteria; and (4) NatWest is entitled to assess each application on its merits regardless of the customer's relationship history with the bank.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website