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

Decision detail

Summary

Mr M complained about Halifax's management of his mortgage taken out in 2003 for £123,000 on an interest only basis, raising multiple issues including the interest only status, fees and charges (particularly ground rent and service charges), an additional 0.5% interest charge applied from April 2025, alleged data protection breaches, and requesting full discharge of the mortgage. The ombudsman found that Halifax's mortgage statements clearly showed the interest only structure which Mr M had been aware of for years, that Halifax was entitled to pay ground rent and service charges to protect their security under the mortgage terms, that the additional interest was justified based on evidence the property was being let out contrary to the residential mortgage terms, and that Halifax acted reasonably in appointing their own solicitors. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that mortgage statements clearly showed the mortgage was operating on part capital repayment and part interest only as intended, and Mr M had been notified of this for years without taking action to change it. Regarding fees and charges, Halifax was entitled under the mortgage terms to pay ground rent and service charges to protect their security, and while they may have paid the 2011 service charge without a court determination, it was likely the charges would have been found payable anyway given the subsequent 2022 court order. The additional 0.5% interest for suspected buy-to-let use was justified based on evidence of online rental marketing and a different Companies House address, and Mr M's refusal to provide proof of residence when requested supported this conclusion. The data protection complaint regarding solicitor involvement was dismissed as lenders are entitled to appoint their own solicitors without obtaining borrower consent. The ombudsman noted that the validity of the mortgage agreement is a matter only a court can decide, not the ombudsman service.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website