DRN-6208823

The complaint This complaint’s about an application Mr and Mrs L made on behalf of their business partnership (which I’ll refer to as ‘L’) to Lloyds Bank PLC for consent to let (CTL) on a property they own. At the time of the application, the property acted as security for borrowing owed to the bank by the partnership. Both partners have joined the complaint but all of our dealings have been with Mr L. Lloyds indicated it was willing to grant CTL, but attached conditions that Mr L considered excessive and unreasonable. The borrowing has since been repaid and the bank’s charge over the property has been released. When Mr L complained about the decision and the resulting loss of rental income, Lloyds paid nominal sums of compensation (£75 and £100 respectively) for some delays and service issues, but defended its decision on the CTL application. What happened The above summary is in my own words. The basic background to this complaint is well known to both parties so I won’t repeat the details here. Instead I’ll focus on giving the reasons for my decision. If I don’t mention something, it won’t be because I’ve ignored it. It’ll be because I didn’t think it was material to the outcome of the complaint. 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’ll start with some general observations. We’re not the regulator of financial businesses, and we don’t “police” their internal processes or how they operate generally. That’s the job of the Financial Conduct Authority (FCA). We deal with individual disputes between businesses and their customers. In doing that, we don’t replicate the work of the courts. We’re impartial, and we don’t take either side’s instructions on how we investigate a complaint. We conduct our investigations and reach our conclusions without interference from anyone else. But in doing so, we have to work within the rules of the ombudsman service, and the remit those rules give us. Having no regulatory function means that it’s not open to me to determine what Lloyds’ policy requirements and appetite for risk should be in cases like L’s. My role is to determine if Lloyds has applied its policy fairly, and here I think it was. Lloyds was entitled to impose the disputed conditions, as a matter of policy and commercial judgement. Also, there’s nothing to suggest it was treating L any differently from how it would treat other commercial customers in broadly similar circumstances making broadly similar requests. I’ve very carefully read everything that Mr L has said about the conditions, and why he believes Lloyds wasn’t justified in imposing them. I understand his frustration, and his strength of feeling, but in the end, this is a dispute about Lloyds’s commercial judgement on what constitutes satisfactory risk management. Mr L clearly has a different opinion from

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Lloyds on this, but what he’s effectively asking me to do is substitute my commercial judgement (or indeed his own or that of his letting agent) in place of Lloyds’. It's not in my remit to do that. Lloyds was the party being asked to assess and manage a variation in risk. It’s not for me to assess the application for risk or second guess how Lloyds should have assessed it. Lloyds exercised its discretion as it was entitled to do. This put L in the position of having to choose between two unwelcome options; either comply with Lloyds’s conditions, or abort the transaction. A choice between two unwelcome options is still a choice, and Mr L opted for the latter and the consequences of it. Lloyds could have handed things more efficiently than it did, and whilst I’ve found the decision to have been a fair one, Lloyds could have made it in a more timely fashion. But it’s apologised for that, and paid what I consider to be fair compensation for the trouble it caused. I said at the outset that I wouldn’t be commenting on every single point, and I haven’t. I have, as I said I would, confined myself to those matters that I consider have a material effect on the outcome. I can see from his submissions how important this is to Mr L. But my remit requires me to be objective, impartial, and to decide what is fair, reasonable and pragmatic in all the circumstances of the case. It also means that I’m not required to provide answers to every specific question that comes up if I don’t consider doing so will affect the overall outcome. My final decision My final decision is that I don’t uphold this complaint. My final decision concludes this service’s consideration of this complaint, which means I’ll not be engaging in any further consideration or discussion of the merits of it. Under the rules of the Financial Ombudsman Service, I’m required to ask L to accept or reject my decision before 26 May 2026. Jeff Parrington Ombudsman

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