Regulation  

Co-operative Bank ordered to refund mortgage ERC

Co-operative Bank ordered to refund mortgage ERC

The Co-operative Bank has been ordered to refund an early repayment charge (ERC) to a customer after they experienced delays when applying to port their mortgage with its intermediary mortgage service ‘Platform’.

Mr and Mrs M had taken a mortgage with Platform in 2019 with a three year fixed-rate and an early repayment charge if they repaid within the fixed year period. 

In June 2020 the couple contacted Platform as they were looking to move house and wished to transfer the mortgage to a new property and were told it would take six to eight weeks for a mortgage offer to be issued once they had applied to port the mortgage. 

Porting a mortgage is the process of taking an existing mortgage deal on the current property and transferring it to another home.

The couple contacted the lender again in mid October 2020 to explain that they had an offer accepted on a property, but by this stage Platform’s timescales had increased to between eighth and ten weeks and the couple were advised they would receive a call back to begin the process. 

Two days later, having not received a call, Mr M phoned the lender but again was told he would receive a call back within five days. He was told that if he did not receive a call by then he should phone again. 

Platform did not return the call, and as a result the couple cancelled their application on November 12, 2020 and applied to another lender for the new mortgage.

Later that month, the couple redeemed their mortgage with Platform and were charged an ERC which they complained to Platform about.

In response to the complaint, Platform offered £25 compensation for the poor customer service in not returning Mr and Mrs M’s calls and said that its timescales were longer than they would like because of the Covid-19 pandemic. 

It was at this point that the couple referred the complaint to the Financial Ombudsman Service. 

The Fos upheld the complaint by Mr and Mrs M who repaid their mortgage early with the lender after Platform did not follow up with them in relation to their request to port their mortgage. 

In his decision to uphold the complaint, Ombudsman Rob Deadman said that while it was Mr and Mrs M’s decision to move to another lender, he believed it was heavily influenced by Platform’s failure to contact them. 

In the ombudsman’s view, it was unfair of the lender to ask the couple to call back if they had not heard from it.

In his decision, Deadman wrote: “It was reasonable for them to decide that if they couldn’t be certain Platform could deal with their application in good time, they would need to look elsewhere while there was still time for another lender to consider it.