Somo welcomes the recent Financial Ombudsman Service (FOS) decision, which dismissed a complaint relating to a bridging loan issued in November 2019. The ruling confirms that Somo acted fairly and reasonably throughout the loan agreement process, reinforcing the company’s commitment to responsible lending.
Background
The complaint centred on a bridging loan, secured against a property, and used for business purposes. The borrowers experienced financial difficulties citing financial hardship due to the COVID-19 pandemic and requested modifications to their repayment terms, including an interest waiver and a deferral of the repayment date. At the time there was significant regulatory pressure to treat customers fairly and allow Borrowers more time to repay citing moratoriums on enforcement proceedings for up to year. Somo reviewed the request in detail and afforded the borrower more time to repay, but maintained that the loan agreement terms should be upheld. The borrower ultimately repaid the loan in full, however later they claimed that the lender’s refusal to waiver the contractual terms led to financial strain and was not fair.
FOS Ruling: Somo Acted Fairly and Reasonably
Following a thorough investigation, the Financial Ombudsman Service ruled in favour of Somo, confirming that the lender had acted appropriately and in line with its obligations. The FOS ruling found that: Somo acted fairly and transparently, giving appropriate consideration to the borrowers’ circumstances and offering to assist them in securing alternative financing. The borrowers had agreed from the beginning that the repayment strategy was to refinance the property, and there was no evidence that Somo acted unfairly in requiring them to adhere to this plan. Somo’s decision to decline the interest waiver was reasonable, as the funds had already been made available to the borrowers for several months. The financial challenges faced by the borrowers, while unfortunate, were not caused by Somo’s lending practices.
“To uphold the complaint, we would need to be satisfied that the Lender had, from an impartial perspective, acted unfairly and/or unreasonably – and on balance, I’m not persuaded it did,” - The FOS investigator in their final assessment.
The Ombudsman further rejected the claim that Somo’s refusal to waive interest and charges was unfair, stating that despite the borrower’s circumstances, the lender was under no obligation to alter the agreed-upon terms and had acted in accordance with the law.
A Commitment to Responsible Lending
This decision underscores Somo’s unwavering commitment to ethical lending as well as investor security. The company works diligently to support borrowers while ensuring the integrity of its financial agreements, balancing commercial viability with fairness.
“We welcome this ruling, which reaffirms our approach to responsible lending. While we always aim to work with borrowers facing challenges, we must also uphold the trust and expectations of our agreements and our investors. This outcome highlights the fairness of our processes and our dedication to operating with transparency and integrity.” - Louis Alexander, CEO of Somo
Investor Confidence Strengthened
This ruling reaffirms Somo’s position as a trusted and reliable lender, committed to robust risk management , ethical lending, and transparency. It highlights the importance of sound financial agreements and demonstrates that our processes withstand ombudsman regulatory scrutiny.
Somo has maintained an impeccable track record of fair, transparent, and responsible lending. Over the past 10 years there have been only 22 complaints that were escalated and ruled upon by the Financial Ombudsman Service (FOS). This is in relation to just under 2,000 loans made (and significantly more applications) of this: 20 were found in Somo’s favour, confirming Somo acted fairly and correctly. 2 were partially upheld citing that Somo and Borrower made mistakes (cost to Somo was £250 and £3,818 respectively).
The company remains focused on delivering strong, secure returns for its investors while maintaining its high standards in specialist lending. We thank you for your continued support,
Louis Alexander,
CEO.
Categories: Investor News
