Upheld: Credit file / adverse marker disputes complaint against Ferratum UK Ltd
Financial Ombudsman decision DRN-3174245 of 2021-12-02T00:00:00+00:00. Credit file / adverse marker disputes complaint against Ferratum UK Ltd. Outcome: Upheld.
Decision detail
| Reference | DRN-3174245 |
|---|---|
| Decision date | 2021-12-02T00:00:00+00:00 |
| Firm | Ferratum UK Ltd |
| Product | Personal loan |
| Claim type | Credit file / adverse marker disputes |
| Outcome | Upheld |
| Remedy | Ferratum UK Ltd must: (1) Update Mr C's credit file to show that the loan account should have been defaulted from June 2015; (2) Arrange for any other adverse information reported after June 2015 to be amended to reflect the account as defaulted; (3) Remove the loan from the credit file, as more than six years have passed since the default ought to have been recorded. Mr C may wish to discuss repaying the outstanding balance with the third-party debt owner. |
Summary
Mr C complained that Ferratum UK Ltd improperly reported missed payments on his credit file for years without applying a default, contrary to good industry practice. Mr C took a £150 loan in November 2014 due for repayment in December 2014, which he failed to pay. Ferratum continued reporting missed payments from February 2016 to May 2019 and sold the debt in October 2019, but never recorded a default. The ombudsman upheld the complaint, finding that ICO guidance on credit reporting constitutes good industry practice and requires a default to be recorded when an account reaches six months in arrears. Since the relationship had broken down with no contact or arrangement, a default should have been applied around June 2015. The ombudsman directed Ferratum to update the credit file to show a default from June 2015 and remove the account, as it would have naturally expired by now.
The Ombudsman's reasoning
The ombudsman applied ICO guidance on credit reporting, which constitutes good industry practice. Principle 4 of the ICO guidance states that a default may be recorded when an account is 3 months in arrears and normally by 6 months in arrears. The ombudsman found that the relationship between Ferratum and Mr C had broken down, evidenced by lack of contact, no payments made, and no repayment arrangement established. None of the exceptions to default application applied in this case. The ombudsman concluded that Ferratum should have defaulted the account around June 2015 (six months after the December 2014 missed payment). Since more than six years have now passed, the account should be removed from the credit file as it would have naturally expired had the correct process been followed.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Ferratum UK Ltd, all decisions | 84 | 42% |
| Credit file / adverse marker disputes, all decisions | 9,663 | 27% |
| Personal loan, all decisions | 23,643 | 29% |
Source
Read the original decision on the Financial Ombudsman Service website