Not upheld: Mortgage administration / arrears handling complaint against NATIONAL WESTMINSTER BANK PUBLIC LIMITED COMPANY

Decision detail

Summary

Mr C complained that NatWest applied a fixed interest rate to his joint mortgage without his knowledge or consent in September 2025, despite his explicit refusal of such applications since mid-2024 due to early repayment charge concerns. The property was subject to a court order requiring sale by March 2026, and Mr C had previously cancelled a fixed rate application in July 2025. NatWest did not uphold the complaint, arguing the fixed rate made the mortgage more affordable and that Mr C's ex-partner would be liable for any early repayment charges. The ombudsman did not uphold the complaint, finding that while notification should have occurred, the fixed rate actually benefited Mr C by lowering payments and reducing credit file risk, no actual financial loss had occurred, and NatWest intended to pursue the ex-partner for any future early repayment charges.

The Ombudsman's reasoning

While the ombudsman acknowledged that NatWest should have notified Mr C of the interest rate change and that applying a product to a jointly liable mortgage without consent raised initial concerns, the complaint was not upheld because: (1) the fixed rate actually benefited Mr C by lowering monthly payments and reducing the likelihood of arrears appearing on his credit file; (2) no application fees were charged; (3) the potential ERC liability had not materialized and NatWest stated it would pursue the ex-partner for any ERC; (4) Mr C had not suffered actual financial loss; and (5) the distress caused did not warrant compensation given the circumstances. The ombudsman noted this was a matter of fairness and reasonableness rather than strict contractual interpretation, and declined to address the broader legal question of whether a contract can be unilaterally varied by internal policy, noting that was a matter for the courts.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website