The Ombudsman's final decision:
Summary: The Ombudsman found fault by the Council on Mr P’s complaint about the way it dealt with his home improvement assistance application. Information in correspondence with him was not always clear, there were no procedures for checking progress with the finance company during its assessment, and there were delays with the complaints process. The agreed action remedies any injustice caused.
- Mr P complains the Council:
- Took 12 months to reach a decision on his application for home improvement assistance;
- Told him it approved his application only to then reject it later the same day; and
- Failed to follow its complaints procedure.
The Ombudsman’s role and powers
- If we are satisfied with a council’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)
- 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 an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
How I considered this complaint
- I considered all the information provided by Mr P, the notes I made of our telephone conversation, as well as the Council’s response to my enquiries, a copy of which I sent him. I sent a copy of my draft decision to Mr P and the Council. I consider their responses.
What I found
- The different parties Mr P dealt with are:
- The Council provides the loan funds and makes the final decision to approve or refuse an application.
Home Improvement Agency
- The Council confirmed this Home Improvement Agency (the agency) is a service delivered by the Council. Its services are monitored for quality by the Council who receive regular reports about complaints, satisfaction, and performance. It helps home-owners by advising about repairs, alterations, and adaptations.
- This is not part of the Council but a private finance company (the finance company). It is not within the Ombudsman’s jurisdiction. It carried out credit checks and looked at information gathered to assess the viability of a loan. If viable, it looks at the type of loan product suitable. It carried out financial checks, got permissions from charge holders, identified the most appropriate loan product, and lodged applications with HM Land Registry to secure the Council’s loan.
- The Council confirmed it had no contractual agreement in place setting out requirements to keep set timescales.
Home Improvement Assistance
- This is a type of financial help the Council gives to successful applicants in the form of a loan for specific property works. The eligibility criteria for this loan, set out in the Council’s ‘Private Sector Housing Assistance Policy 2014’, are:
- An applicant must own their property and lived in it as their main residence for 3 years;
- Or, if a tenant with the responsibility of carrying out repairs under their lease, have the agreement of their landlord; and
- Applicants are assessed and prioritised against health, work needed, age, and income. Priority is determined by the number of points an applicant is awarded under each category. A property with no heating, for example, attracts more points than one needing bathroom repairs.
- Priority is given to those:
- over 60 and receiving means tested benefits;
- providing medical evidence they suffer from an illness or disability and receive means tested benefits;
- low income families with a child under 5; and
- where work is needed to keep their home safe, warm and dry, or to remove a condition posing a risk to their health and safety.
- All applications are financially assessed by the finance company. This assessment forms part of the consideration of the application. The policy states the Council assesses an applicant’s income, outgoings, and capital assets.
- The Council only makes a loan available if satisfied the applicant is unable to access any commercially available loan product to fund the works.
- Mr P owns his house. In August 2016, he sent the Council an application for Home Improvement Assistance to allow various improvements to his home. These included repairing or renewing windows. He says he told the officer who visited to help him complete the application he worked but struggled financially. A Council officer visited to survey the property before sending a schedule of work to contractors for quotes.
- In September, Mr P was happy with the proposed contractor quote. The Council sent the application to the finance company who sent a surveyor to value the property. It contacted charge holders to ask for their agreement for the Council to take a second charge on the property.
- While the Council says the finance company experienced problems contacting Mr P at this point, it provided no evidence in support.
- By March, the Council said the finance company started to ask questions about the loan to value ratio of the loan along with Mr P’s level of unsecured debt. No evidence to support this claim was sent. One of the charge holders confirmed it agreed to a further charge on the property. Mr P sent a copy letter from the finance company which confirms it approved the application on 10 March.
- During April and May, the finance company told Mr P about a delay registering the charge with HM Land Registry. The finance company later told Mr P that where the Council has not approved the application within 3 months of it approving it, its policy was to re-assess the application. In May, the finance company did another assessment, including a credit search. It realised his financial position had changed since its earlier assessment so recommended refusing the application. The same month Mr P entered in to an Individual Voluntary Arrangement (IVA). This is a formal agreement to repay creditors a set amount over time.
- In June, the Council says the finance company told an officer it was all set up and ready for approval. No evidence to support this was sent. This also contradicts what the finance company told Mr P about recommending refusal. Mr P received notification from HM Land Registry that the finance company had sent it an application to register a charge. The charge was between Mr P and the finance company. The finance company placed a charge on the property before the Council decided whether to approve or refuse the application.
- On 20 June, the Council confirmed an officer sent the proposed loan product and costing to his manager for approval. The Council failed to provide evidence showing this. The manager was not satisfied the loan was the best option for Mr P. No record showing who made this decision or what was taken in to account was provided.
- Mr P received 2 emails from a Council officer about the application on 20 June:
- The first email told him that the officer had ‘received confirmation from [the finance company] that it is OK to proceed’. It explained the officer had applied for the funds to be made available to the Council. When received, the Council would contact the contractor to arrange a works agreement to sign; and
- The second email, 2 hours later, said the Council declined the application. This told him that unless he could show an equity release scheme or loan was unavailable to him from a reputable company, the Council would decline the application.
- The Council sent him a letter the same day confirming it declined his application. It would support him with advice about repairs but unless he could show an equity release or loan scheme was unavailable to him through a reputable high street provider, it could not support him with a preferential loan. It ended by saying, ‘The reasons for this decision are: You are employed, you are not disabled and you have equity in your property’.
- On 27 June, Mr P told the Council about the IVA. The Council confirmed applicants with this arrangement were not eligible for a loan but provided no evidence showing this.
- Two days later, the finance company confirmed it would not recommend the loan, although no evidence showing this was provided. The Council confirmed the removal of the charge from his property and paid all charges he owed the finance company.
- On 7 July, the Home Improvement Agency responded to his complaint. It found some delays between the first visit by the finance company in October 2016 to the second visit in March 2017. It waived fees payable by Mr P and told him about the Council’s complaints procedure.
- The Council accepts Mr P seemed eligible for a loan when it received his initial application. The finance company began to raise concerns when it prepared a credit report. When the Council formally considered all the information, it had concerns about the application because:
- This was a low priority case in terms of its criteria;
- Taking account of his age and employment, it queried why he had not taken out a secured loan; and
- Of the loan to value ratio.
- I found the following fault on Mr P’s complaint causing avoidable injustice:
- The Council failed to provide documentary evidence in support of some of its claims;
- The finance company claims it completed its assessment and recommended approval in March. While there is no evidence showing why the Council did not determine the application at this point, the finance company said it would reassess an applicant’s finances if the Council failed to decide the application within 3 months of its decision. The Council had 3 months from 10 March to reach a decision on the application. During this time, Mr P’s financial situation changed;
- The application form it sent does not allow applicants to provide information about their health. If an applicant not having a disability makes them ineligible (see paragraph 23), this could have screened out this application at the start;
- Nor does the application form allow applicants to give their employment status. If their employment status makes them ineligible (see paragraph 23), again this could have screened out this application at the start. I have not seen the information sent to the financial company but if this included details of his employment, the Council would have been aware of his employment status at the start of the process;
- The first email the officer sent on 20 June was misleading and raised Mr P’s expectations. It said the finance company agreed it was ‘OK to proceed’. The officer failed to explain this was not the end of the process. The officer did not explain the manager had yet to make a final decision on the application. The email also said the officer had, that morning, applied for the funds to be made available by the Council. The officer failed to explain getting funds depended on the manager approving the application. A reasonable inference from the email was the Council had approved the application. The email went on to say as soon as the funds were in place, the officer would contact the contractor. Mr P could then discuss a start date. I note the Council sent the second email 2 hours later so his raised expectations were short-lived.
- The reasons given in the letter of 20 June 2017 do not match the criteria set out in its policy and are confusing. The policy refers to taking an applicant’s income in to account while the decision reason given was his employment. It fails to refer to his income. The same is true about the lack of a disability as a reason, although the policy refers to health rather than disability. The decision reason refers to him having equity in his property. It does not give an amount. If it meant to say he was ineligible because of capital, it needed to explain this clearly and say what the threshold was and why he was over it;
- The letter sent mixed signals. It started off saying the Council declined the application but went on to say he needed to provide evidence of refusal of a loan from a high street lender. It then told him the reasons for the decision to refuse;
- Although the Council explained what actions the finance company took while it was assessing Mr P’s finances, it failed to provide evidence in support; and
- The Council failed to show it had any controls, procedure, or agreement with the finance company to monitor progress on its assessments.
What happened: the complaint
- The Council’s complaints procedure has 2 stages:
- Stage 1: The Council acknowledges receipt within 3 working days. It aims to respond to it within 10 working days. If it cannot, it will advise of the delay and give updates; and
- Stage 2: The Council acknowledges receipt within 3 working days. It aims to respond to it within 10 working days. If it cannot, it will advise of the delay and give updates.
- The key dates for Mr P’s complaint are:
- 24 July 2017: Mr P sent the Council his complaint which the Council acknowledged 3 days later. The email warned the officer reviewing the case was on leave until 14 August. It explained it would aim to respond to his complaint by 25 August;
- 31 August: The Council warned him the officer needed further information and the officer he needed to speak to was on leave. The date for a response was now 8 September. This email was in response to 2 emails Mr P sent on 30 and 31 August asking for updates;
- 8 September: An officer emailed him saying he was preparing a response. He needed to discuss some aspects with officers who were unavailable until the following week;
- 29 September: The Council sent him its stage 1 response. This explained financial hardship was a contributing factor when considering an application. It does not require an applicant to be unemployed. It said when made aware on 27 June that he could not get a loan through a reputable high street provider and had entered in to an IVA, this caused the Council further concern. An IVA is not a reason for offering a loan. It increases the financial risk to the Council. It asked the finance company to look again at his finances. The Council claimed the company had written recommending refusal of the loan;
- 11 October: Mr P asked for a review of his complaint which the Council acknowledged the following day;
- 19 October: The Council told Mr P it would respond to his complaint by 31 October;
- 31 October: The Council sent him its stage 2 response. This confirmed his application was low priority in terms of its priority criteria. Mr P’s age and employment status caused the Council to question why a secured loan was not an option for him. It also considered the loan to value lending ratio. An updated financial check found a ‘significant deterioration’ in his financial position since applying.
- I found the following fault on Mr P’s complaint causing avoidable injustice:
- At stage 1, the Council told him he would receive a response by 25 August. When it failed to send it, the Council only contacted him about it in response to Mr P asking for an update 5 days later. This is fault.
- On 8 September, the Council told him an officer needed to speak to another officer the following week. The response was not sent to him until 29 September, almost 2 weeks later. This is fault.
- I considered our internal guidance on remedies and the Council’s decision to pay all Mr P’s charges incurred by the finance company.
- I also took account Mr P entered in to an IVA in May 2017 but did not disclose it until the end of the following month. In the circumstances, it was unlikely the Council would have approved his loan.
- The Council agreed to take the following action within 4 weeks of the final decision on this complaint:
- A written apology to Mr P for the faults identified above and for the impact this had on him. It should give an assurance these will not be repeated in the future and give details of the action taken to ensure this;
- Pay Mr P £250 to acknowledge his raised expectations and the inconvenience and frustration he experienced during the 10-month process;
- Review its arrangements with the finance company in terms of introducing procedures/protocols to keep track of progress, or lack of progress, during the financial assessment stage. In response to my draft decision, the Council confirmed it has started the review which looks at the contractual arrangements it has with external providers;
- Look at why the Council failed to decide this application in March 2017;
- Remind officers of the need for clear communication with applicants so they are made fully aware about what stage their application has reached, what the next stage involves, and are given clear information about decisions which follow policy;
- Remind officers dealing with complaints of the need to ensure they comply with the complaint procedure timescales and keep complainants updated when there are likely to be delays; and
- Communicate lessons learned from this case to relevant officers involved.
- The Ombudsman found fault on Mr P’s complaint against the Council. The agreed action remedies the avoidable injustice this caused.
Investigator's decision on behalf of the Ombudsman