FOS saw 7,067 new cases involving mortgage complaints in the year to March 2011, compared with 7,469 the previous year.
FOS settles disputes between consumers and financial companies. The ombudsman handled over a million front-line enquiries and complaints from consumers - around 4,000 each working day – in the period.
In its annual review covering the 2010/11 financial year it says: “The number of mortgage-related complaints we received fell slightly during the year. The cases continued to involve the same types of issues – and broadly reflect the economy and the state of the mortgage market as a whole. Administrative errors remained the largest area of complaint.
“We also saw an increase in the number of complaints from consumers whose applications to “port” their residential mortgage (in other words – transfer it to a new property) had been declined. In the cases we see, this often happens where – because of the tougher mortgage market in recent years – the lender has tightened their lending criteria, resulting in the consumer no longer meeting the required criteria.
“It is unusual to see mortgage contracts that allow the consumer unconditionally to “port” their mortgage as a contractual right. Lenders vary in the flexibility they offer to consumers wanting to move and we do not set the lending criteria applied by mortgage lenders. But we can look at whether the lender has treated its customer fairly.
“In our experience, it is helpful if a decision on lending is clearly communicated and explained – so that the consumer can understand why they do not qualify to “port” their loan. In some cases, where the individual circumstances warrant it, we may decide that a fair outcome is for the lender to waive an early repayment charge – rather than allowing the loan to be “ported”.
“We have also seen complaints during the year where the dispute involves the decision by a lender to significantly reduce the upper age-limit applying to the term of a mortgage – or to require the consumer to provide proof of retirement income.
“Complaints about mortgage interest rates were less of an issue during the year. This probably reflected the low Bank of England base rate and the fact that, as fixed-rate mortgage products come to an end, some consumers were benefiting from historically-low variable rates.
“The number of complaints about the handling of arrears remained at a similar level to the previous year. However, we continued to see a significant number of complaints about arrears charges applied by some lenders – and about lenders being inflexible, particularly when the consumer’s circumstances or proposals did not fall into any of the standard categories forming part of their lender’s normal approach.
“Cases involving repossession remained a small part of our work. However, they continued to raise difficult and sensitive issues. A common theme was the lack of effective communication from the lender, once the property had been taken into possession.
“The cases we dealt with involving repossession also frequently included complaints about delays – including delay in passing on surplus funds to other lenders who had legal charges over the property, and delay in providing the consumer with a final statement detailing the costs and expenses the lender had applied to the debt.
“We also saw complaints about delays by the lender in confirming whether they intended to ask the consumer to pay any debt relating to shortfalls on the mortgage.”
