A landmark ruling has been made in favour of a 61-year-old father who was turned down for trying to extend his mortgage. Peter Day, who was 59 at the time he made his application to the Co-operative Bank, wanted to extend his mortgage by five years in order to reduce the amount he was repaying each month. His daughter was getting married and he wanted to fund the wedding.
When he was refused, he made an official complaint to the Banking Ombudsman, claiming he had been made a victim of ageism. After an investigation, the Ombudsman found in favour of Mr Day. The ruling stated that the Co-op had not shown that it had acted in a fair manner. It also stated it did not act “within the terms of the Equality Act.”
Compensation of nearly £2,000 to be paid
As a result of the ruling, the bank was ordered to pay Mr Day £500 by way of compensation. They were also required to pay £1,389 – the amount Mr Day paid to switch his mortgage to another provider.
Changes have been made
As a result of the case, the bank has now updated its policy. The maximum age for making the final mortgage repayments has now been increased from 68 to 75. The bank also issued an apology to Mr Day.
What could this mean for other customers?
The ruling will almost certainly have caught the attention of other people who may have found themselves in similar situations. Since the Mortgage Market Review regulations came into force, there have been many reports of people being rejected for mortgages – or extensions to an existing mortgage – because they are ‘too old’. Few will have considered making a complaint to the Banking Ombudsman as a result. Although Mr Day’s complaint is believed to be the first that has been found in favour of the customer, it does highlight the need for banks and building societies to avoid any suggestion of ageism.
There have certainly been other people who have been rejected for a mortgage because of their age. In this case, Mr Day also had other accounts with the bank, meaning they could easily have accessed all the information required to assess whether or not he could afford the extension. He was also a good customer and stated that his “current financial position” posed no concerns.
Will it open the floodgates for other potential complaints?
Mr Day clearly did not make the complaint because he sought compensation. He used to work in a building society many years ago and was determined to go through the Ombudsman to make a point on behalf of other customers. Now that his success has reached the news, others may see it and decide to make their own formal complaints.
Adhering to the MMR rules has led to some accusing banks and building societies of rejecting applications on the basis of applicants being too old. This case shows that in some cases that approach may be entirely wrong.