UK Mortgage Lending Ltd trading as Pepper Money · DRN-6198976

The complaint Mr C complains about the way that UK Mortgage Lending Ltd trading as Pepper Money has administered his mortgage. What happened In June 2021, Mr C took out a mortgage with Pepper Money. He complains Pepper Money: • Failed to tell him about product switch options when the fixed rate ended in 2023. That meant he missed out on an interest rate of 5.79%. • Gave him incorrect information about the arrears. • Failed to make reasonable adjustments under the Equality Act 2010 and has continued to attempt to contact him by phone. • Delayed processing paperwork in connection with his application for support for mortgage interest (SMI). • Did not handle his complaint fairly – it refused to give him all call recordings, only partially upheld his complaint and offered £200 compensation, wiped information from its secure messaging system, ignored his emails and has stopped responding to him. I issued a jurisdiction decision. I said the following complaints were addressed in Pepper Money’s final response dated 29 August 2024: • Mr C was unhappy with the contact from Pepper Money regarding his complaint. • In a phone call on 15 June 2024, Mr C was given incorrect information that if he made a payment in the same calendar month a payment was due then the mortgage would not fall into arrears. • In a phone call on 15 June 2024, Mr C was told that a partial payment would reduce the arrears balance to under one month’s arrears and would allow a product transfer to be made. • The product transfer request was declined. I said those complaints had been referred outside the time limits in our rules, so we could not consider them. The investigator thought that Pepper Money’s offer to backdate an interest rate of 7.49% to 1 August 2024, to pay Mr C £1,000 for any distress and inconvenience and to pay £610 for the delay in arranging SMI was a fair way to settle the complaint. Mr C did not accept what the investigator said. He responded to make a number of points, including:

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• Pepper Money ignored his request for written communication in view of his disability. That was in breach of the FCA’s Principes 6 and 7 and CONC, and the Equality Act 2010. Pepper Money had a duty to make reasonable adjustments. • He was never told he was eligible for a product switch. The investigator accepted Pepper Money’s claim that a 5.79% interest rate did not exist solely based on its rate sheet. He should have sought independent verification. Pepper Money had not acted in line with MCOB 11.6.2R and 11.6.3R, which required lenders to act fairly and disclose suitable product options. • The charge on his property was registered to UK Mortgage Lending Ltd not Pepper Money Ltd, despite his contract referring to Pepper Money. The lender had been misrepresented. Under MCOB 3.2.4R there is a requirement to disclose the true identity of the lender. And Pepper money was required to give him clear, fair and not misleading information. • The offer of £1,000 compensation is inadequate and does not reflect the length of the delay. • We had accepted Pepper Money’s submissions despite not all call recordings being provided and “evidence of complaint closure irregularities”. • The “entity switching” and procedural inconsistencies raised governance and control issues that should be reported to the Prudential Regulation Authority. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. I understand the importance of this complaint to Mr C. I’ve thought carefully about everything he’s said and provided. But after doing so, I agree with the investigator that the offer Pepper Money has made is a fair way to settle the complaint. My role My role is to decide what I consider is fair and reasonable in the individual circumstances of this complaint – taking into account any relevant, laws, rules and regulations, codes of practice and what I consider to have been good industry practice at the time in question. If I do not consider Pepper Money has treated Mr C fairly, then I can tell Pepper Money what it should do to put things right. But in all the circumstances, I consider Pepper Money’s offer is a fair way to put things right. It is not my role to punish Pepper Money or to make findings that it has breached specific rules or regulations. I note that this is a regulated mortgage contract, so the CONC rules Mr C has referred to do not apply here. The lender When Mr C took out the mortgage the lender was Pepper Money Ltd – that it is a different entity to UK Mortgage Lending Ltd On 26 June 2021, Mr C accepted the offer and its terms and conditions. The terms and conditions set out that the lender could sell, assign or transfer some or all of its rights, title, interests, benefits and obligations under the mortgage. I am satisfied it was entitled to

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transfer the mortgage to another lender. Under MCOB 7.6.2, a firm must tell its customers as soon as possible who will be responsible for setting interest rates if any interest in the mortgage is sold, assigned or transferred. Pepper Money has given us evidence that on 30 August 2023, the original lender wrote to Mr C and told him the mortgage was being transferred to UK Mortgage Lending Ltd trading as Pepper Money. And on 11 September 2023, the new lender wrote to Mr C to tell him the transfer had gone ahead and it was the new lender. I am satisfied that Pepper Money has acted fairly in respect of the transfer of the mortgage Valuation Mr C said the property was significantly undervalued when the mortgage was taken out: • Pepper Money was not responsible for the valuation. It was carried out by an independent third party – a surveyor who was not employed by Pepper Money. • It was reasonable for Pepper Money to rely on the independent valuation when deciding how much to lend and the terms on which it was prepared to lend. • I don’t consider Pepper Money acted unfairly in accepting the valuations Product switch I do not accept that Pepper Money offered a fixed rate of 5.92% or 5.79% in October 2023. Pepper money has given us its product transfer rates that show it offered a two-year fixed rate of 8.97% and a five-year fixed rate of 8.15%. I will explain why: • Mr C has given us a screen print of an “AI overview”, which said Pepper Money had a five-year product transfer rate of 5.79% “according to a mortgage comparison site”. But we have not been provided the name of the product comparison site or evidence to support that the AI overview was correct. • At the time in question, the Bank of England base rate was 5.25%. • I have also reviewed the information on Moneyfacts – a publication that sets out the interest rates offered by mortgage lenders. It only shows the interest rates offered by Pepper Money to new borrowers who apply through an intermediary. It is not a direct comparison to the product transfer rates offered, which can be higher than for new borrowers. There would be no obligation for Pepper Money to offer the same rates to existing and new borrowers. The information on Moneyfacts does not support that Pepper Money offered any interest rates as low as 5.92% or 5.79% at the time in question. I am not persuaded that a 5.92% or 5.79% fixed rate was actually available to Mr C in October 2023. In any event, I don’t consider Pepper Money treated him unfairly when it dealt with him around that time. I will explain why: • On 20 September 2023, Mr C spoke to Pepper Money. He said he’d struggle to afford the payments due. The conversation focussed on that and the support it could provide –

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but Pepper Money did set out that Mr C could explore his options with a broker or by looking at its website for existing customers – which included the option for a product transfer. • On 22 September and 5 October 2023, Mr C spoke to Pepper Money specifically about switching to interest only under the Mortgage Charter. I can’t see that there was any reason why Pepper Money to discuss product transfers during those calls. So I don’t consider Pepper Money treated Mr C unfairly when it spoke to him in September and October 2023. In April 2024, Pepper Money offered Mr C a product transfer on to a fixed rate of 7.49% for three years. Mr C never accepted the product switch. But Pepper Money has agreed to honour that and backdate it to 1 August 2024. I consider that is a fair way to resolve this part of the complaint. Reasonable adjustments Mr C said he was diagnosed with ADHD in January 2024 and made repeated requests for Pepper Money to only deal with him in writing. He said that Pepper Money continued to contact him by phone and did not answer his emails He considers that is a breach of the Equality Act 2010 and the FCA’s principles. • It is not for me to decide if there has been a breach of the Equality Act 2010 or if Pepper Money has not acted in line with the FCA’s Principles for Businesses. But I must take those things into account when deciding what I consider to be fair and reasonable in the individual circumstances of this case. • Pepper Money said it was made aware Mr C has ADHD in July 2024 – but it was only in April 2025 when Mr C asked for contact in writing only. It said that it did not make any outbound phone calls following that. Pepper Money said it communicated in writing and emails, although that can only be accessed by a secure portal. • Pepper Money said in July 2025 Mr C complained about the secured portal. Pepper Money said it told him that it could not email him directly – so the only contact from that point was in writing. But it added that it can be difficult to only correspond in writing in view of the arrears on the mortgage. The key point here was that Mr C was vulnerable. He told Pepper Money he had ADHD, he’d suffered an income shock, lost his job, had caring responsibilities and had fallen into arrears on his mortgage – and that he needed adjustments to the way Pepper Money communicated with him. I don’t consider Pepper Money has always handled that as well as it should have. For example, the contact notes it has provided do not always record that Mr C is vulnerable or the nature of his vulnerability. It has accepted that it has not always responded to emails as it should have. Overall, I agree that Pepper Money has not always acted fairly. I will deal with fair compensation for that below. SMI Pepper Money has accepted that it caused one month of delay so that Mr C’s SMI application could be processed. I have not seen any evidence to support that it was responsible for the full delay. I consider its offer to refund one month of SMI payments - £610 – is fair.

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Complaint handling Mr C considers Pepper Money has not given him recording of all the phone calls or all the email messages he’s sent. It is not clear why he needs that information. Pepper Money has sent the information in a commonly used format. If he feels that it hasn’t complied with the Data Protection Act 2018, then he can raise that matter with the Information Commissioner’s Office. Conclusion I was sorry to hear of the difficult time Mr C has been through. I understand why he feels that Pepper Money has contributed to the position he is in. I agree it has not always treated him fairly. But overall I consider the offer it has made to resolve things is fair in all the circumstances: • Pepper Money has agreed to backdate the three-year fixed rate of 7.49% to August 2024. I think this recognises Mr C’s vulnerability and that it could have done more to accommodate that. I would note that the product has an early repayment charge that would apply if the mortgage is repaid, including if the property was repossessed. • Our guidelines say that we’d make an award of over £750 where the impact of a business’s mistake has caused substantial distress, upset and worry, with the impact felt sometimes over a year. In all the circumstances, I consider £1,000 is a fair amount to reflect the impact of this matter on Mr C. • The compensation is not intended to compensate Mr C for all of the worry and upset he’s suffered because he was in financial difficulty. It is only intended to compensate him for the upset and inconvenience caused by one month of the delay to the SMI application and the failure to communicate by Pepper Money as well as it should have – particularly in view of Mr C;s individual circumstances. My final decision My final decision is that UK Mortgage Lending Ltd trading as Pepper Money should: • Pay Mr C £1,000. • Backdate the three year fixed rate of 7.49% to 1 August 2024 – if Mr C wants to go ahead with that. • Pay £610 to reflect one month’s SMI payment. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr C to accept or reject my decision before 6 April 2026. Ken Rose Ombudsman

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