The Financial Ombudsman Service has upheld a complaint against HSBC for unfairly rejecting a mortgage application on the grounds of age in the first case of its kind, according to The Sunday Times.

The complaint was made by a couple in their forties, who do not wish to be named, because they were turned down when applying for a joint £250,000 interest-only loan over an 18-year term.

HSBC rejected the application on the basis the husband would have been over 65 when the loan had to be repaid. The couple, who are said to hold substantial equity in their home, were first issued with a decision in principle before the bank decided not to proceed. The couple then referred their complaint to the FOS.

In the decision, the FOS said: “The bank relied on untested assumptions, stereotypes or generalisations in respect of age.”

The FOS added the bank’s assessment of the application was “inadequate” and “flawed” and criticised HSBC over “unfair application of its age policy”.

HSBC has been ordered to pay £500 compensation and been told to reconsider the application.