Leader: Time to reassess criteria

Last week, the Financial Ombudsman Service arrived at a landmark ruling when it found HSBC had unfairly rejected a mortgage application on the grounds of age.

A couple in their forties were turned down when they applied for a joint £250,000 interest-only loan over an 18-year term because Mr A, as he was referred to in the judgment, would have been over 65 when the loan had to be repaid.

While HSBC said it was entitled to have a maximum age policy, the FOS ruled that the couple’s joint income would have been sufficient to meet the monthly repayments.

This case is hugely significant and could well have set a precedent for similar cases in the future.

Some of the criteria around lending into retirement are ludicrous and, hopefully, this ruling will push lenders into reassessing how they treat borrowers who have loans that extend beyond state retirement age. 

And if it does not, then long may the FOS make such a public mockery of nonsensical lending policies.

As Patrick Bunton, director at London & Country and chairman of the Association of Mortgage Intermediaries, suggests in this week’s Mortgage Strategy, there may also be scope for borrowers to complain to the FOS should lenders refuse to implement the MMR’s transitional arrangements.

The MMR has rightly cleaned up lending but too often lenders hide behind the rules when they attempt to justify their often bizarre lending policies.

The broker community should continue to make its voice heard on this matter. Lenders listened when it came to proc fees and panel removals, so it is right to remain optimistic that they will listen on criteria too.