The Financial Ombudsman Service has upheld a complaint against HSBC for unfairly rejecting a mortgage application on the grounds of age in the first case of its kind.
The Sunday Times reports a couple in their forties, who do not wish to be named, were turned down when applying for a joint £250,000 interest-only loan over an 18-year term.
HSBC rejected the application on the basis the husband would have been over 65 when the loan had to be repaid.
The couple, who are said to hold substantial equity in their home, were first issued with a decision in principle before the bank decided not to proceed.
The couple then referred their complaint to the FOS.
In the decision, the FOS says: “The bank relied on untested assumptions, stereotypes or generalisations in respect of age. “
The FOS added the bank’s assessment of the application was “inadequate” and “flawed” and criticised HSBC over “unfair application of its age policy”.
HSBC has been ordered to pay £500 compensation and been told to reconsider the application.
HSBC told the newspaper: “As a responsible lender, we need to ensure our customers’ ability to repay their mortgage.
“Regulatory requirements to show responsible lending and the repayment vehicles associated with interest-only loans have become more stringent since this application was made. It’s important to stress that when we look at a mortgage application we take a number of different factors into account, which includes assessing each customer’s individual circumstances.”