A decision by Fos to uphold a client complaint against HSBC on grounds of ageism could prove to be a “landmark decision”, the chairman of the Equity Release Council has said.
Nigel Waterson said the Fos decision earlier this month, in which the ombudsman upheld a complaint against HSBC after the bank denied a couple in their 40s a mortgage on the grounds of age, was the first time an age-related complaint has been upheld.
The bank was ordered to pay the couple £500 and was told to reconsider the couple’s loan application.
He said: “This could prove to be a landmark decision, one that paves the way for greater lender acceptance of borrowing in later life. With so many pensioners facing financial hardship and life expectancies far longer than before, the current restrictions by some lenders on lending into retirement are outdated and unfair.”
A culmination of interest-only loans maturing, recent pension freedoms and tighter lending criteria have all placed funding in later life centre stage, with many older would-be borrowers tending to go down the equity release route, he said.
Mr Waterson said: “Those at or nearing retirement age need options; until the age of 55 homeowners routinely remortgage to boost finances, but after that point are increasingly restricted in their access to this – and other – forms of borrowing.”
A spokesman for HSBC said: “As a responsible lender, we need to ensure our customers’ ability to repay their mortgage. With interest-only lending we also need to understand how a customer will repay the capital when the mortgage matures.”
Adviser response
David Wilson, managing director at Tyne and Wear-based NE Money, agreed that the ruling could result in more people complaining to Fos if their mortgage application was rejected. He said: “Lenders need to be extremely clear as to why they have rejected an application because, more often than not, it is because of something that was not made clear in their criteria.”
