Disabled RAF Veteran Battles Lloyds Bank Over Mortgage Charge

A retired Royal Air Force pilot grappling with motor neurone disease encountered significant challenges when attempting to settle his mortgage with Lloyds Bank. The veteran, who has lost his ability to speak due to the condition, faced unexpected charges and communication hurdles during the process.

The customer's fixed-term mortgage with Lloyds Bank was set to conclude on June 1, 2024, with a remaining balance of £132,515. In May 2024, he began making substantial payments to clear the debt, adhering to the online transfer limit of £25,000 per day. However, complications arose when the final payment, scheduled for June 2, didn't process as expected due to the weekend.

The bank subsequently imposed an Early Repayment Charge (ERC) of £1,913, despite the customer's intention to clear the balance by the mortgage end date. This situation highlights the complexities of mortgage terms and the potential pitfalls of timing in financial transactions.

"I feel this is a cynical ploy where my options included paying in May and risk being charged an ERC, or pay in June and incur an additional month's interest at the standard variable rate."

The customer made multiple attempts to resolve the issue, including visiting the local branch twice despite his physical limitations. He used a writing board and wore a laminated sign to explain his situation, demonstrating the additional challenges faced by individuals with disabilities in managing their finances.

Andrew Montlake, a mortgage broker, provided insight into the ERC application, stating that overpayments exceeding 10% of the total mortgage amount typically trigger such charges. This information underscores the importance of clear communication from financial institutions regarding complex terms and conditions.

Following intervention, Lloyds Bank acknowledged the service shortcomings and agreed to refund £1,992.93, covering the charges and interest. Additionally, they offered £200 as compensation for the inconvenience caused.

A Lloyds Bank spokesperson expressed regret for the difficulties experienced by the customer, admitting that the service provided fell below their usual standards. They clarified that while the ERC debits were technically correct, the bank should have communicated this more effectively when initially contacted.

This incident highlights the need for financial institutions to improve their services for customers with disabilities and ensure clear communication regarding complex financial products. It also demonstrates the potential benefits of seeking external assistance when facing unresolved banking issues.