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ombudsman announces record mortgage complaints as financial difficulties increase

14 May 2014

the ombudsman urges struggling home owners to seek help sooner rather than later and lenders to get creative in supporting their customers, as exclusive figures reveal:

  • A third of people contacting the ombudsman with mortgage problems are in arrears.
  • 4 in 10 cases are from people who say they are struggling with their payments.
  • Increasing numbers of people concerned about losing their homes are in "debt denial" - and risk leaving it too late to seek help.
  • Lenders need to take a less "black and white" approach to helping people get through difficult times.

The Financial Ombudsman Service today reveals that record numbers of consumers are making mortgage complaints - but increasing numbers of people are letting the situation get out of hand before seeking the help they need.

Last year 13,659 people - the highest number recorded - contacted the ombudsman for help with a mortgage or secured loan problem. Yet a third of those people had slipped into arrears before they sought help.

Of the remaining cases, it became clear that a large number of people struggling to make ends meet felt unable to say that they were facing significant financial problems - or were concerned about the impact of telling their lender of their situation.

The ombudsman has also been working with lenders to make it clear that they’re expected to get creative when helping people get back on track - especially before payments get missed. And though early signs suggest that this is having an impact, there’s still more that they can - and should - do to help.

key figures and statistics

  • In the last year we received 13,659 complaints about mortgages and secured loans. This is the highest number of complaints about home loans the ombudsman has ever seen (12,845 in 2012/13).
  • Around 25,000 people contacted our helpline with questions or concerns about home finance problems.
  • The ombudsman upheld around a third of all mortgage complaints (30%). But on many occasions, what the customer was seeking was unrealistic - like suspending payments or interest indefinitely, or writing off debt.
  • 3 in 10 mortgage cases were appealed to an ombudsman for a final decision, the vast majority of which were referred by consumers (90%), reflecting how significant our decisions can be to people’s lives.
  • Of all the cases received by the ombudsman where people said they were in severe financial difficulty, half involved mortgage problems.

typical areas of complaint include:

Problems directly related to financial difficulties, meeting payment plans or debt, including:

  • Arrears handling
  • Charges
  • Repossession
  • Post-repossession problems
  • Recovery of shortfalls

Other problems brought by people in arrears include:

  • Sales and the advice to take out mortgage products
  • Problems with the administration of the mortgage
  • Upfront fees charged where no mortgage is offered and declined offers
  • Disputes over valuations
  • Allegations of misrepresentation, suitability or misleading literature

chief ombudsman, Tony Boorman said:

Mortgages are the most significant purchase most of us will make in our lives, so we understand why people might be reluctant to say that they’re struggling to pay for their home.

Many of the cases where people face losing their home have been heartbreaking to deal with - but could potentially have been avoided. So if money is tight, you should never be afraid to ask for help or guidance. Speak up sooner rather than later, there’s a lot that can be done to help before things get out of hand.

Consumers and lenders all have a responsibility to work together when problems arise. And though it pays to be realistic about the options available to you, if your lender isn’t listening, we’re here to give you practical, honest advice to help sort out your problem.