Partially upheld: misrepresentation / misleading information regarding mortgage lending criteria complaint against United Trust Bank Limited

Decision detail

Summary

Mr S applied for a mortgage with UTB to purchase a property with an occupancy clause. Before submitting the application, his broker called UTB and was told the occupancy clause would not be a problem. After the application was made, UTB refused to lend, citing its policy against such properties. Mr S had already incurred valuation and solicitors' fees. UTB initially denied responsibility but later offered a valuation fee refund and £100 compensation. The ombudsman found UTB's initial reassurance was misleading and that the firm underestimated the impact of its error and subsequent handling, awarding an additional £300 in compensation while rejecting the claim for solicitors' fees as a foreseeable loss arising from Mr S's decision to instruct legal work before mortgage approval.

The Ombudsman's reasoning

The ombudsman found that UTB gave misleading reassurance about the occupancy clause before the application was made, which was contrary to its actual lending policy. While the ombudsman acknowledged that Mr S took a risk by instructing solicitors before a mortgage offer was issued, and therefore rejected the claim for solicitors' fees, the ombudsman found that UTB underestimated the impact of its mistake. The ombudsman considered that Mr S spent considerable time and effort on the mortgage application and supporting work that should never have been done, and that UTB's initial denial of responsibility caused further disruption. The ombudsman determined that £100 compensation was insufficient to reflect this disruption over several months.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website