Aldermore Bank Plc · DRN-6150806

The complaint D, a limited company, complains that Aldermore Bank Plc made errors when it made overpayments into its buy to let mortgage accounts. D’s director, who I’ll refer to as Mr D, has dealt with the complaint on D’s behalf. He asks for an explanation, that his monthly payments are corrected and no early repayment charge is applied and for compensation of £300. What happened D has two buy to let mortgages with Aldermore, which I’ll refer to as mortgage A and mortgage B. Each mortgage is on an interest only basis and has a fixed interest rate product with an early repayment charge. D can make overpayments of up to 10% each year without paying an ERC. D made overpayments into each mortgage account in early 2025. D made further overpayments in mid-2025. Mr D says Aldermore made errors. He didn’t receive an email to confirm that he wanted D’s monthly payments to be adjusted. When he checked online at the end of June 2025 Aldermore hadn’t adjusted D’s monthly payments. Mr D finds this particularly frustrating, given he’d raised a complaint about the same problem after D made overpayments in early 2025. Mr D said Aldermore told him that D could continue with the same monthly payments without incurring an ERC – which he says can’t be correct. Aldermore said it made an error when it didn’t apply the overpayment promptly to mortgage B in mid-2025. It said it wasn’t clear about whether it would send an email after it received the overpayment. Aldermore adjusted mortgage B and paid compensation of £150. It told Mr D that D would not incur an ERC if its monthly payments were not adjusted immediately after it received an overpayment. Our investigator said Aldermore had done enough to put things right. Mr D didn’t agree and asked that an ombudsman re-consider 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. D has fixed interest rate products for its two buy to let mortgages. These products include ERCs which apply if the mortgage is repaid during the product term. However, D can make limited overpayments without an ERC. The two mortgage offers say: We will accept overpayments to your mortgage account at any time during the term of the mortgage provided that the total amount overpaid in any 12 month period does

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not exceed 10% of the outstanding balance at the start of that period. The early repayment charge in this section will apply to any other amount you repay early and an administration fee will also apply. On receipt of an overpayment, if you give us your consent we will recalculate your monthly repayment with effect from the date that we receive the cleared payment. If you do not give us your consent, we will not recalculate your monthly repayment until the next interest rate charge. Mr D’s complaint is about errors made by Aldermore when D made overpayments. And that it gave him unclear and inconsistent information about the process and when an ERC would apply. Mr D said the complaint has four parts. I will address each part separately. 1. D’s monthly payments were not adjusted, as per Mr D’s specific request In early 2025 Mr D contacted Aldermore about making overpayments. Aldermore confirmed D’s 10% allowance and D made overpayments into each mortgage account in January 2025. In February 2025 Mr D called Aldermore to ask why D’s monthly payment hadn’t reduced. Aldermore said this wasn’t automatic. That’s consistent with the mortgage offers which say Aldermore will recalculate the monthly payments at the next interest rate change unless it has D’s consent to do the recalculation immediately. Aldermore said it should have told Mr D this when he called in January 2025. It adjusted D’s accounts to reduce the monthly payments and paid £50 compensation. D made further overpayments in mid-2025. The overpayment for mortgage A was received in late May 2025. Aldermore says it applied the overpayment to mortgage A on a timely basis, and reduced D’s monthly payments from 30 June 2025 onwards. The overpayment for mortgage B was received in early June 2025. Aldermore says there was a delay in it applying the overpayment to mortgage B. This was an error, which it corrected. Aldermore adjusted D’s monthly payment with effect from 28 August 2025. The amount D paid in excess of the monthly payments due in June and July 2025 was used to reduce the capital balance. While Aldermore made an error when it didn’t apply the overpayment to mortgage B on a timely basis, it corrected this and paid compensation. I think Aldermore has done enough to put this error right. 2. Mr D didn’t receive an email in mid-2025 to confirm he wanted D’s monthly payments to be adjusted, despite being told he’d be sent an email during a call in late February 2025 Aldermore said Mr D made it clear during the call in May 2025 that he wanted the overpayments to be used to adjust D’s monthly payments. It said it didn’t need to email Mr D to ask him to confirm this. Aldermore didn’t make an error when it didn’t send an email to Mr D in mid-2025. It didn’t need to send an email because Mr D had already said he wanted the monthly payments to be used to adjust the monthly payments. Aldermore said that the information Mr D had been given in February 2025 about whether an email would be sent to him after an overpayment was unclear. It paid compensation for this. It confirmed to Mr D that it had noted on D’s account that monthly payments should be recalculated after overpayments.

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I think Aldermore has done enough to put this error right. 3. D incurred an ERC on the small capital repayments D’s monthly payments were not adjusted immediately after it made an overpayment into mortgage B. But there’s no evidence an ERC or other fee was applied as a result. If Aldermore had applied an ERC or administration fee to D’s monthly payments for mortgage B in June 2025 or July 2025 this would be shown on the mortgage statements. Mr D would be able to provide this as evidence an ERC had been applied. As there’s no evidence that an ERC or administration fee was applied to mortgage B, there’s nothing that I can fairly require Aldermore to put right. 4. Mr D says he was given incorrect information when he was told that ERCs aren’t applied to mortgage payments after the 10% ERC free allowance has been used. Mr D is concerned that Aldermore will apply a fee if D’s monthly payments are not adjusted immediately after an overpayment. That’s because D would be paying an amount in excess of the interest accrued, thereby making a small capital repayment each month. Aldermore told Mr D that no ERCs would be applied provided the overpayments stayed within the 10% allowance, regardless of whether his monthly payments were adjusted. It told Mr D this during the call in late May 2025 and confirmed it in the final response letter. Mr D wasn’t satisfied with this. He said the complaints handler accepted this wasn’t his area of expertise and he was only repeating what he’d been told. Mr D had a call with a member of Aldermore’s servicing team in early August 2025. He says Aldermore’s staff member initially told him the same as her colleagues – that no ERC would be applied to monthly payments – but after questioning she “caved” and agreed that anything over the 10% ERC free allowance is chargeable. Mr D says Aldermore’s statement that no ERC will apply to monthly payments isn’t in the mortgage terms and conditions and he fears Aldermore has misled him (and us). Aldermore’s contact notes say Mr D called the complaints team to ask about overpayments and the ERC, he was transferred to mortgage support and transferred again to the servicing team. Aldermore’s notes don’t say that it told Mr D it would apply an ERC to D’s monthly payments. They say it explained how overpayments work for an interest only mortgage, and Mr D said he’d be raising this with the financial ombudsman. Mr D isn’t comfortable relying on what he’s been told by Aldermore, as it isn’t set out in the mortgage terms and conditions. But that doesn’t mean what Aldermore told him is incorrect. There’s no dispute that Aldermore would apply an ERC if D made overpayments in excess of the ERC free allowance. The issue here is whether an ERC would be applied to monthly payments made by D in accordance with the terms of its mortgages. Aldermore told Mr D (and confirmed in writing) that D won’t be charged an ERC on its monthly payments even if they are not reduced immediately after an overpayment. Mr D says he’s been told this by three different people at Aldermore. Aldermore has also confirmed this to us. There’s no evidence that D was charged an ERC when its monthly payments were not adjusted immediately after it made an overpayment into mortgage B in mid-2025. I don’t think Aldermore has fairly to do more to respond to this point. What compensation is fair and reasonable?

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D is the eligible complainant under our rules (it’s D that took out mortgage A and mortgage B). I can only consider the impact of Aldermore’s errors on D. I can’t consider the losses or upset of third parties – such as Mr D. Aldermore has applied the overpayment to mortgage B and adjusted D’s monthly payments. The unclear information about whether Mr D would receive an email confirmation after the overpayment didn’t cause any loss. There’s no evidence that Aldermore applied an ERC to D’s monthly payments. So D isn’t out of pocket. D is a limited company. As such, it doesn’t feel upset, frustration or worry so this isn’t something I can fairly require Aldermore to pay compensation for. Aldermore’s errors caused inconvenience to D and D’s director (Mr D), and I can award compensation for that. This inconvenience involved Mr D calling Aldermore to ask why D’s monthly payments for mortgage B hadn’t reduced following the overpayment in mid-2025, and to ask why he didn’t receive an email about how he wanted the overpayments to be used. I think, for the amount of inconvenience caused, £150 compensation is fair and reasonable. I appreciate that it was inconvenient for Mr D to make further calls to Aldermore, to question what he’d been told about the ERC not applying to monthly payments and whether an ERC had been applied. But that wasn’t due to any error by Aldermore so I can’t fairly ask it to pay further compensation. My final decision My decision is that I do not uphold this complaint. That’s because I think Aldermore Bank Plc has done enough to put matters right. Under the rules of the Financial Ombudsman Service, I’m required to ask D to accept or reject my decision before 20 April 2026. Ruth Stevenson Ombudsman

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