Topaz Finance Limited · DRN-5992114

The complaint Mrs M complains about how Topaz Finance Limited trading as Hessonite Mortgages has administered her mortgage account. She says that: • She’s unhappy with the interest rate on her mortgage and she says she’s been overcharged interest. • Hessonite is incorrectly treating the mortgage as a Buy-to-Let (BTL) instead of a Consumer Buy-to-Let (CBTL) mortgage. This has impacted the way Hessonite has administered the account and her ability to remortgage with a different lender. • She’s unhappy with the information Hessonite has reported to the credit reference agencies. • She’s a mortgage prisoner. • Hessonite wouldn’t freeze the interest on her account. What happened Mrs M took a BTL interest-only mortgage with Northern Rock in 2003 and the account was sold to Hessonite in October 2023. Over the years Mrs M has encountered financial difficulty, and the account has fallen into arrears. Mrs M has been unhappy with the way Hessonite has administered the account. She’s raised several complaints over the years. Hessonite answered this particular complaint in mid-2025. Unhappy with the response she got, Mrs M asked our Service to look into things. An Investigator said that we couldn’t consider some parts of the complaint. And, for the parts he found we can consider, he didn’t uphold the complaint. Mrs M didn’t agree and asked for her case to be decided by an Ombudsman. 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’ve given careful consideration to all the submissions made by the parties, but I won’t address each and every point that has been raised. I’ll focus on the matters that I consider most relevant to how I’ve reached a fair outcome – in keeping with the informal nature of our Service. Having done so, I don’t think this complaint should be upheld. I realise this will be disappointing for Mrs M. But I hope the reasons I have set out below will help her to understand why I have come to this conclusion.

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Following Northern Rock’s collapse, Mrs M’s mortgage was transferred to the government- owned vehicle which became NRAM. In 2023, Mrs M’s mortgage was sold to Hessonite as part of a wider transfer. Following its collapse, Northern Rock stopped offering new borrowing, and stopped offering new interest rates to existing lenders. And when NRAM took over, it too did not do either of those things. NRAM’s purpose was not to gain new borrowers, but to gradually wind down or sell off existing loans. Because NRAM is government owned, it can’t offer new lower interest rates that would compete with other lenders. It’s part of the terms of the nationalisation that Northern Rock and NRAM only offer a standard variable rate (SVR) – which is comparable to the SVR of other lenders. When her preferential interest rate deal ended, Mrs M could remain on the SVR – or move to another lender. In 2023, Mrs M’s mortgage was sold to Hessonite – who also operated as a ‘closed book lender’. It is generally expected that new interest rates are available when an old one expires – but there’s no regulatory or contractual right to a new rate. That said, in these circumstances I think it would be fair and good practice for lenders dealing with closed and nationalised loan books to direct its customers to seek independent mortgage advice so they can explore whether it’s possible to switch their mortgage to a different lender with more preferential interest rates. Hessonite provides helpful information about this on its website. Whilst on the SVR there was no early repayment charge applicable to Mrs M’s mortgage. So I don’t think Mrs M has been subject to unfair barriers preventing her moving to another lender to get a better deal. All other Northern Rock, NRAM and Hessonite customers were in the same position as Mrs M, so I don’t think I can say she was treated unfairly or differently to other customers. Mrs M’s mortgage was on the SVR prior to the transfer to Hessonite. I’ve looked at the SVR history of Hessonite and its predecessor lenders, and I don’t think Mrs M has been overcharged interest. Mrs M’s main complaint is that her mortgage has been miscategorised by Hessonite as a BTL instead of a CBTL. She says as a result she’s been deprived of the regulatory protections and fair treatment afforded to CBTL borrowers and she’s had problems switching her mortgage to a new lender as a result. Mrs M took this BTL mortgage with Northern Rock in 2003. She says that previously – until 2001 she lived in the property as her main residence. In 2001 she moved and began renting this property. Mrs M says because she lived in the property previously, this meets the definition of a CBTL. CBTL mortgages were introduced in 2016. These are for so-called “accidental” landlords who didn’t initially intend to rent out their property. This is often where the consumer previously lived in the property and is now intending to let it out or has inherited a property and wants to let it out. The customer could apply to transfer their mortgage from a residential mortgage to a CBTL, provided they didn’t own any other rental properties and it wasn’t their intention to rent the property when they bought it. So given this describes Mrs M’s circumstances, I can understand why she feels the CBTL definition applies to her. However, Mrs M’s mortgage is not a CBTL. I’ll explain why. CBTL mortgages were introduced in 2016, so when Mrs M took the mortgage with Northern Rock in 2003, CBTL mortgages didn’t exist. It appears that Mrs M thinks that from 2016 the CBTL provisions applied automatically to her mortgage. I say this because she’s told our

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Service that when her mortgage was transferred to Hessonite, she wasn’t informed her protections would be removed or that she would be classified differently. The CBTL framework doesn’t apply retrospectively, nor does it apply automatically. These provisions only apply to qualifying, new BTL mortgages that started on or after 21 March 2016. So, when CBTL mortgages were introduced in 2016, those rules and protections did not then automatically apply to Mrs M’s existing BTL mortgage. Mrs M would need to apply to transfer her mortgage from a BTL to a CBTL. But because Mrs M has been with a closed blook lender since at least 2016, it’s not been possible for her to remortgage internally. And that means that the BTL terms that Mrs M agreed to when she took out her mortgage in 2003 have applied throughout. Mrs M feels that because her mortgage transferred to Hessonite in 2023, a new contract formed and because the transfer happened after 2016, the CBTL provisions should have at the very least applied to her mortgage from this point. The transfer of the mortgage to Hessonite did not alter the terms and conditions of the existing mortgage and so at this point the mortgage continued as it was – a BTL mortgage. And as I’ve said, a switch to CBTL does not happen automatically – an application is needed. Because Mrs M is with a closed book lender, she would need to remortgage with a different lender to obtain a CBTL mortgage. That said, not all lenders offer CBTL mortgages. Mrs M says that another lender refused to lend to her on CBTL terms. I can’t comment on the lending decision of a different lender here. I can only consider the actions of Hessonite and its predecessor lenders. And when doing so I don’t think Mrs M has been treated unfairly. Mrs M says that despite multiple requests, Hessonite allegedly refused to freeze interest on the mortgage while the CBTL classification issue was under review. Mrs M says that daily interest continued to accrue at high rates, which she believes was a deliberate tactic to render the mortgage unaffordable. I’ve considered the reasons that Mrs M says Hessonite should’ve frozen the interest being applied to the mortgage, but I don’t agree. Hessonite is under no obligation to freeze interest in a situation like this – where there is an ongoing dispute about the mortgage account. There may be some situations where it’s reasonable for a lender to consider freezing interest as a forbearance measure to help the customer get the account back on track following a period of short-term financial difficulty. But those circumstances don’t apply here. Mrs M hasn’t made payment to her account since January 2023 and I don’t think she’s shown any reasonable prospect of getting the account back on track soon. So, I don’t think that by not agreeing to freeze the interest charged, Hessonite has acted unfairly here. It’s also important to note that Hessonite is not obliged to agree to this as a forbearance option in any event. Mrs M is unhappy with the information reported on her credit file. All lenders have a duty to report fair, up to date and accurate data about their customers to the credit reference agencies. This is to ensure that the lending system is well informed about each customer’s credit profile. Mrs M’s mortgage account has been in arrears for some years; Hessonite has a duty to report the account in that way to the credit reference agencies. So, I can’t say its acted unfairly by doing so. For the reasons I’ve explained, Hessonite has also accurately reported this mortgage as a BTL instead of a CBTL. Lastly, I note Mrs M has raised other complaints about Hessonite. I’ve not commented on any complaint points that have already been considered by our Service because we don’t generally look again at complaints we have previously considered. Having considered this complaint, I don’t find that Hessonite has acted unfairly, nor do I think its actions have led to

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the relationship currently being unfair. It’s for these reasons that I don’t uphold this complaint. My final decision My final decision is that I don’t uphold Mrs M’s complaint against Topaz Finance Limited trading as Hessonite Mortgages Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs M to accept or reject my decision before 20 April 2026. Arazu Eid Ombudsman

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