HSBC UK Bank · DRN-6319923

The complaint The estate of Mr B complains that HSBC UK Bank Plc delayed in making a payment of IHT, incurring interest. The estate is represented by its executor, Mr B1. What happened Mr B sadly passed away in June 2022. There was a dispute between Mr B1 and his brother in respect of the validity of the latest will made by Mr B. Mr B1 asserted that a previous will was the valid one. He notified HSBC about this dispute in July 2022. Notwithstanding this HSBC released funds to pay the funeral expenses. The dispute was settled by mediation by an agreement dated 11 March 2025. As a part of that agreement the first will was recognised as the valid will and Mr B1 became the executor. The executors appointed by the second will had renounced their appointment previously. The IHT had to be paid urgently as interest had been running on it. A form IHT423, to enable the tax to be paid directly to HMRC was issued to HSBC on 25 March. HSBC had been notified by Mr B1’s brother that the dispute had been settled. However it had not received any documents to show this. It spoke to Mr B1 on 3 April and explained that it needed to see copies of both wills, the renunciation, and the mediation settlement. Mr B1 was prepared to supply the (now agreed as valid) first will and the renunciation. But he didn't see why HSBC needed the second will, and with regard to the mediation settlement he said this was subject to a Non-Disclosure Agreement (NDA). HSBC said it couldn’t release the payment until it was satisfied the dispute had been settled, and the documents supplied weren’t sufficient for that. It was prepared to accept a letter from the solicitors who acted for his brother and who drew up the agreement. However Mr B1 then reluctantly supplied a copy of the mediation settlement. As a result HSBC released the payment to HMRC on 15 May 2025. Mr B1 said that as the estate was liable to interest of £1,089 because of the delay, HSBC should pay that. HSBC said that it wouldn't agree to pay the interest. It did say however that there was a lack of communication at first because of confusion as to who the executor was. It offered to pay £250 to Mr B1. On referral to the Financial Ombudsman Service, our Investigator said HSBC should pay the interest charged to the estate from 25 March 2026 until the date of settlement. She explained that we could not award a distress and inconvenience payment to Mr B1, so we couldn't consider the offer of compensation. HSBC didn't agree with paying the interest, so the matter was passed to me for an Ombudsman's consideration. I issued a provisional decision. In it I said that I didn’t think HSBC was responsible for payment of interest incurred from 25 March until settlement. But that it should pay the estate £200 in respect of interest incurred during a period when it didn’t get back into contact with

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Mr B1. HSBC agreed with my provisional findings. Mr B1 didn’t agree. I’ll deal with his main points below. 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. The following were my provisional findings: “Part of the reason why it was thought that HSBC should pay the interest is because it paid the funeral costs even though it was aware of the dispute. I don't think that that is relevant to the IHT payment. It does appear that the bereavement team paid the funeral account without referring it to the technical team. In any event the funeral costs are fixed and the bulk of the payment that was made went to the funeral directors. I bear in mind that Mr B1's brother had been in contact with HSBC in February 2025 and had informed it of the caveat lodged against probate. So, I think HSBC acted fairly when it asked for evidence that the dispute had been settled before it could pay the money over to HMRC. Although, as I understand it the amount of tax payable had been agreed with HMRC, the bank didn't have evidence as to who agreed it. Unlike the funeral costs IHT Isn't a fixed figure and it could have depended on which will was valid. Also the terms of the settlement dealt not only with the validity of the will but with the transfer of assets. This wasn’t disclosed to HSBC but could have affected the amount of IHT. Whilst the parties had reached agreement over this, I don’t think it was reasonable to expect HSBC just to accept what Mr B1 told it. I've noted Mr B1 was reluctant to supply a copy of the second will. However with the renunciations (which Mr B1 didn’t supply until 29 April), HSBC would have been able to see what that related to. Mr B1 asserted that he couldn't supply a copy of the mediation settlement as this was subject to an NDA. I don't think that would have applied to supplying a copy, on terms which preserved confidentiality. Whilst I note that Mr B1 had difficulty in getting the solicitors to cooperate, he could have written to them just to confirm what he was doing if he felt he needed to cover himself. As it is Mr B1 did release a copy of the mediation settlement, but not until 14 May and as a result HSBC released the money in the account to HMRC. So I don't think HSBC is responsible for payment of interest incurred from 25 March until settlement. However due to a mix up as to which executor was giving instructions, I don't think that Mr B1 was made aware of what HSBC's requirements were until he contacted it on 3 April. For this reason I think the estate could be said to have made a financial loss in respect of the interest incurred during this delay, and HSBC should contribute £200 to this. In respect of the £250 offered to Mr B1 for his distress and inconvenience, as our Investigator has explained, the complainant in this case is the estate. And as such we can't make awards for distress and inconvenience to the executor who acts as a representative of the estate. If HSBC is still willing to offer the aforesaid payment, Mr B1 should liaise directly with it.”

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inconsistent application of policies Mr B1 has pointed out that HSBC didn't appear to follow its own policy when paying the funeral bill and that it was inconsistent of it to do so whilst declining to pay the IHT. I agree that technically HSBC shouldn't have paid the funeral bill, as it had been made aware of the dispute. Though I observe that it does have different policies concerning balances below £5,000, like the funeral bill, and those above £5,000 like the IHT due. I don't doubt that Mr B1 thought that because of this it should have paid the IHT as asked. But I’m equally satisfied think that HSBC was wrong in requesting details of the settlement. caveat/ renunciation of executorship I’ve corrected the parts of my provisional decision to show that it was Mr B1 rather than his brother who had placed the caveat. I've also corrected it to show that the executors of the subsequent will had previously renounced their executorship, some time before the mediation. However this didn't invalidate the will concerned but just removed the executors named in it. It could still have been administered by another party. the value of the IHT due I again accept that it was correctly calculated as part of the settlement. Though the issue here is that HSBC required to see the relevant documents to confirm that the parties to the settlement had agreed. It had to assess the risk of releasing the monies. I accept that, in part to protect itself and in part to protect the estate (there being no grant of probate at that stage) it acted reasonably in asking for that proof. Although I observe that other financial institutions released monies without requiring a copy of the settlement, that doesn't mean that HSBC acted incorrectly. I’m aware that the sums it held were much larger than the other institutions involved. the NDA I accept that on the face of it the mediation settlement didn't mention releasing a copy of it to the bank although it did mention the possible release of it to the parties’ auditors or lawyers. I can't speak for why the solicitors who drew up the settlement didn't consider banks or financial institutions. But Mr B1 had decided, no doubt for financial reasons, that he would represent himself when agreeing the settlement. And unfortunately that did require him to make a decision whether to release a copy of it to HSBC. I don't think it was unreasonable for HSBC to suggest that in lieu of a copy of the agreement the solicitor should write a letter. Although I understand Mr B1’s concern that he or the estate would have to pay for it. distress and inconvenience Mr B1 has already been advised by us that we can’t award payments for distress and inconvenience to executors. This isn't based on whether we think it's reasonable to do so but on the fact that our powers are limited to awarding compensation to the complainant, in this case the estate. And it has long been established that an estate cannot be said to suffer distress and inconvenience. So, whilst noting Mr B1’s points, I remain persuaded by my provisional findings save for the minor corrections I have referred to. Those findings are now final and form part of this final decision.

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Putting things right I require HSBC to pay £200 compensation. My final decision I uphold the complaint in part and require HSBC UK Bank Plc to provide the remedy set out under “Putting things right” above. Under the rules of the Financial Ombudsman Service, I’m required to ask the estate of Mr B to accept or reject my decision before 26 May 2026. Ray Lawley Ombudsman

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