Not upheld: Mortgage administration / arrears handling complaint against Bank of Scotland plc

Decision detail

Summary

Mr L complained about his mortgage with Bank of Scotland, claiming it was mis-sold and raising concerns about service failures including account location issues, inappropriate team transfers, and continuing interest charges after the mortgage term ended. The mortgage was arranged in 2005 on an interest-only basis and was not repaid when due in 2020 because endowment policies failed to provide sufficient funds. After the term ended, BoS continued collecting the same direct debit amount despite interest rate increases, causing the mortgage balance to grow. Mr L disclosed serious illness and neurodivergence in November 2023 and appointed an Attorney under lasting power of attorney. The ombudsman found that while BoS made errors in not adjusting payments and providing insufficient information, Mr L would likely have been unable to afford increased payments anyway, so he was not in a worse position. Other complaints were either adequately resolved through apologies and compensation or handled reasonably by BoS.

The Ombudsman's reasoning

The ombudsman found that while BoS failed to adjust the direct debit amount when interest rates changed and did not provide sufficient information about the shortfall, Mr L would likely have been unable to afford the increased payments due to his financial circumstances and illness. The ombudsman concluded that Mr L would have ended up in the same position (with an increasing mortgage balance) regardless of BoS's error. For the other complaints, BoS either apologised appropriately (misdirected letter), acted reasonably (account team transfers and DSAR handling), or provided adequate compensation (£100 for the account transfer error).

How this compares

Source

Read the original decision on the Financial Ombudsman Service website