Summary: Miss X complained the Council changed its decision to reimburse her mortgage broker fee, which the Council agreed to after it withdrew the first Right to Buy offer. We found the Council at fault. The Council has agreed to apologise and make a payment to Miss X.

The complaint

1. Miss X complained the Council changed its decision to pay back a £500 mortgage broker fee when a new manager started. Miss X also complained about the Council’s delay in dealing with the matter which has affected her mortgage interest rate and caused her stress.

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The Ombudsman’s role and powers

2. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused significant injustice, or that could cause injustice to others in the future we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
3. If we are satisfied with an organisation’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)

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How I considered this complaint

4. I considered the complaint and the information Miss X provided.
5. I referred to our Guidance on Remedies, (a copy of which can be found on our website).
6. Miss X and the Council had an opportunity to comment on my draft decision. I considered any comments received before making a final decision.

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What I found

What happened

7. In January 2023, Miss X applied to purchase her council house. The Council offered her a purchase price which she accepted. Miss X then enlisted a solicitor and a mortgage broker to support her with the purchase.
8. In June 2023, the Council realised that it had miscalculated the discount offered on the property, withdrew the first offer, and replaced it with a new offer that increased the purchase price. The Council accepted this miscalculation was fault and offered to “look into” expenses incurred by Miss X when acquiring the original mortgage offer and solicitor fees.
9. Miss X provided evidence of her payments to the mortgage broker, and in August 2023, the Council said it would repay the £500 broker fee and the solicitor fees incurred.
10. In October 2023, the Council said the repayment was approved by a manager and was with the accounts team to send payment.
11. Three weeks later a new manager changed the decision, instead offering £150 compensation along with the solicitor fees. The Council said this was because it is not compulsory to involve a mortgage broker, and there are other ways to pay brokers. It advised Miss X to recuperate the costs through the mortgage broker directly, or by contacting the Financial Ombudsman or the Financial Services Compensation Scheme.

My findings

12. The Council accepted there was fault in its first offer to Miss X and offered to “look into” the costs she incurred.
13. Miss X chose to use a mortgage broker to support her through her mortgage application as she had not purchased a property before. Miss X sent the invoice for the broker fees to the Council, however there was a delay in responding to this. Miss X made multiple attempts to chase the repayment.
14. In August 2023 the Council confirmed that it agreed to repay the costs.
15. There was then a further delay until October 2023, when a manager approved the payment.
16. Later in October 2023 there was a change in management. A new manager reviewed the approved payment and requested an additional itemised invoice confirming what the £500 payment was for. The following day, without receiving the itemised invoice, the manager changed the agreement offering Miss X a £150 goodwill gesture and explained they would not repay the £500 cost.
17. I find, on balance, if there was not a delay in agreeing, approving, or sending the repayment, Miss X would have received the £500.
18. Miss X chose to pay for a mortgage broker’s services. However, if the Council had correctly calculated the first offer, she would have benefitted from this service. Due to the Council’s error and the withdrawal of the first offer, Miss X was left responsible for the broker’s fee and had to pay it again to apply for a mortgage based on the Council’s revised second offer. As a result, Miss X had to pay the mortgage broker twice. This is an injustice to Miss X.

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Agreed action

19. To remedy the injustice to Miss X from the faults I have identified, within four weeks of my final decision the Council has agreed to:
• Apologise to Miss X in line with our guidance on making an effective apology.
• Pay Miss X £500 to cover the cost incurred by paying a mortgage broker, putting Miss X in the position she would have been but for the fault.
20. The Council should provide us with evidence it has complied with the above actions.

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Final decision

21. I have completed my investigation. There was fault by the Council. The action I have recommended is a suitable remedy for the injustice caused.

Investigator’s decision on behalf of the Ombudsman

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Investigator's decision on behalf of the Ombudsman