Earlier this month, the FOS upheld a complaint against HSBC after it denied a couple in their 40s a mortgage on the grounds of age - the first time an age-related complaint has been upheld.
HSBC refused to consider their application because Mr A would be over 65 years old at the end of the proposed term. HSBC said it has a policy not to allow interest only mortgages to applicants who would be over 65 at the end of the term.
However the couple complained that the refusal to consider their application purely on the basis of Mr A’s age was discriminatory. They said that their personal circumstances meant that there was no additional risk to the Bank or to them in lending to them jointly rather than to Ms B alone.
The FOS agreed that "the Bank relied on included untested assumptions, stereotypes or generalisations in respect of age and wasn’t relevant to Mr A and Ms B’s circumstances", concluding that HSBC’s risk assessment in their case was flawed.
Nigel Waterson said that the decision could "pave the way for greater lender acceptance of borrowing in later life". He added that the current restrictions by some lenders on lending into retirement are "outdated and unfair".
The FOS ruling agreed, stating that as the bank would have been prepared to offer the amount requested to Ms B alone, it was unclear why the lending wouldn’t have been acceptable if Mr A was added to the mortgage.
Nigel Waterson continued:
“Those at or nearing retirement age need options; until the age of 55 homeowners routinely remortgage to boost finances but after that point are increasingly restricted in their access to this – and other – forms of borrowing.”
“A culmination of interest-only loans maturing, recent pension freedoms and tighter lending criteria have all placed funding in later life centre stage. For many older would-be borrowers the obvious solution is to hand, in the form of equity release."
