Topaz Finance Limited · DRN-6322987

The complaint Mr M complains that Topaz Finance Limited trading as Hyalite Mortgages didn’t apply overpayments to his mortgage account correctly. He says this caused financial loss, stress and frustration, and he’s had to spend time trying to sort the issue out. Mr M asks that Hyalite carries out a full and transparent audit of his account since 2023 (when it transferred to Hyalite), adjusts his mortgage account as if the overpayments were correctly applied, explains how future payments will be applied and pays compensation. What happened Mr M took out an interest only mortgage with another lender. This transferred to Hyalite in 2023. Mr M’s mortgage was in arrears and he made overpayments of £125 each month in accordance with a court order. Mr M says in previous years this resulted in his balance reducing by about £1,500. After the mortgage transferred to Hyalite he continued to make the same monthly overpayments, but the mortgage balance only reduced by about £500. Mr M says his account shows monthly debits that vary from month to month. Our investigator said the evidence, including the annual statements, showed the payments made by Mr M had been applied to the mortgage account. Mr M said Hyalite had not explained why his balance didn’t reduce in 2024 to 2025 as it had in previous years, despite him maintaining contractual monthly payments and making the same overpayments. I sent a provisional decision explaining why I intended to uphold this complaint. In summary, I said Mr M’s overpayments had been applied to his account. The reason his balance didn’t reduce by as much was because Hyalite calculated his contractual monthly payments in a different way to the previous lender. Previously Mr M’s monthly payments were calculated using a balance that included the arrears. Hyalite calculated Mr M’s contractual monthly payments using a balance that excluded the arrears. As a result, part of Mr M’s monthly overpayments went towards paying the interest on the arrears. I said Hyalite should pay compensation of £250 to Mr M for failing to explain this. Hyalite didn’t agree. However it did eventually confirm that Mr M’s balance didn’t reduce by as much as it had in previous years due to it excluding the arrears when calculating his contractual monthly payments. Mr M didn’t agree. Mr M said Hyalite should reduce the balance by £1,000 and pay compensation of £1,500 for the upset and inconvenience caused. 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.

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Mr M’s arrears balance (and overall balance) reduced by about £1,500 between 1 April 2023 and 31 March 2024, as it had done in previous years. His arrears balance (and overall balance) reduced by about £500 between 1 April 2024 and 31 March 2025. Mr M maintained his contractual monthly payments and made monthly overpayments, as required by the court order. The payments he made were applied to his mortgage account. So in that sense, Mr M has not lost out. But Mr M expected his arrears balance to continue to reduce by the amount of the overpayments, and that didn’t happen. I think Mr M’s concern about this is understandable. And I think Hyalite should have provided an explanation that was correct and clear. When Mr M raised his concerns, Hyalite said it calculated his contractual monthly payment as 1/12 of the interest over a year. It said that the amount of interest debited each month varies with the number of days in the month. That’s no doubt correct. But it didn’t explain why Mr M’s balance didn’t decrease by the amount of the overpayments between April 2024 and March 2025, as had been the case in previous years. In my provisional decision, I said I thought the issue was due to Hyalite using different balances to calculate Mr M’s contractual monthly payment as compared to the monthly interest applied to his account. Hyalite calculates the contractual monthly payment based on the “interest-bearing balance” – this does not include the arrears balance. However, it applies interest to the whole balance (including the arrears balance). That means the interest applied each month is higher than the contractual monthly payment that it requests from Mr M. So part of Mr M’s overpayments were applied to pay the interest not covered by the contractual monthly payments. In my provisional decision I said it seemed to me, from the evidence provided, that Mr M’s monthly payments had previously been calculated on the whole balance including the arrears. So all of Mr M’s overpayments went towards reducing the arrears balance. Hyalite didn’t agree with this initially. But it has now confirmed that the previous lender used the same balance (which included the arrears balance) to calculate both the monthly payments and the interest. And when the account was transferred to Hyalite in late 2023 it excluded the arrears when calculating the monthly payments. Hyalite said this created a difference between the amount of interest charged and the amount of the contractual monthly payments, and so part of Mr M’s overpayments were used to pay interest. Hyalite said it can’t comment on the way another lender chooses to calculate monthly payments. That’s not the issue here. The issue is that Hyalite didn’t provide a clear and correct explanation to Mr M as to why his overpayments (which totalled about £1,500) only reduced the balance by about £500 between April 2024 and March 2025. I think this caused Mr M upset and inconvenience for which it should fairly pay compensation. I don’t think it’s fair and reasonable to require Hyalite to reduce Mr M’s mortgage balance by £1,000. Mr M’s payments were applied to the mortgage account, so these funds were not lost. And it did confirm in its final response that his overpayments were received and applied to the account. Mr M might argue that if he’d known the contractual monthly payment didn’t include all of the interest applied each month, he’d have increased his overpayments. That would have reduced the amount of interest applied to his mortgage – although not by as much as £1,000. It’s difficult to know for certain whether or not Mr M would have increased his payments. I must in fairness take into account that if Mr M wanted to reduce the arrears balance as quickly as possible, and had funds available, there was nothing to prevent him

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from increasing his overpayments. Mr M’s arrears were capitalised in April 2025. So while Hyalite ought to have given him a clear and correct explanation in May 2025 as to why his mortgage balance didn’t reduce as he’d expected, this didn’t have any impact on his payments after April 2025. I think Hyalite’s failure to explain what had happened caused Mr M inconvenience, frustration and worry and this continued for some months. He had to bring his complaint to us in order to get an explanation. Mr M believes compensation of more than £250 is warranted. But I do need fairly to take into account that he wasn’t out of pocket or caused hardship by Hyalite’s failure to explain what had happened. Hyalite did confirm the overpayments were applied to the mortgage account. Mr M’s arrears were capitalised in April 2025, so the issue was not ongoing. For the unnecessary upset caused by Hyalite’s failure to explain correctly what had happened, I think £250 compensation is fair and reasonable in the circumstances. My final decision My decision is that I uphold this complaint and order Topaz Finance Limited trading as Hyalite Mortgages to pay £250 to Mr M. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr M to accept or reject my decision before 26 May 2026. Ruth Stevenson Ombudsman

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