The Financial Ombudsman Service has intervened after the Co-operative Bank denied a 59-year-old a mortgage extension.
Peter Day had nearly paid off his mortgage when he applied for a five-year extension, according to the Mail.
When the Co-operative said no, despite Day having three final salary pensions, Day went to the FOS.
The ombudsman overruled the Co-operative Bank decision and requested they pay Day £500 compensation and to cover the £1,389 it cost him to switch lenders.
An FOS spokesman says the body could not comment beyond saying the ombudsman had reached a provisional decision on the issue that all parties had agreed on.
A Co-operative Bank spokeswoman would not comment.