Upheld: credit file reporting accuracy and Debt Arrangement Scheme treatment complaint against Lloyds Bank PLC

Decision detail

Summary

Mr W complained that Lloyds was unfairly reporting adverse information on his credit file following his entry into a Debt Arrangement Scheme (DAS) in 2017, which would continue until 2031 and remain visible until 2037. He argued that Lloyds should have defaulted his account at the start of the scheme, which would have dropped off his credit file by now. An investigator recommended removing all adverse information and showing payments as made on time. The ombudsman upheld the complaint but rejected both the investigator's approach and Mr W's arguments, finding that reporting the account as in an arrangement was the most accurate and fair approach, as the DAS was designed to maintain payments and avoid default while providing protections to Mr W.

The Ombudsman's reasoning

The ombudsman concluded that while Mr W's frustration was understandable, reporting the account as in an arrangement rather than defaulted was the fair and accurate approach. A default would not accurately reflect the account performance because the DAS was entered into specifically to maintain payments and avoid default, and Mr W received protections under the scheme including frozen interest and charges, and protection from creditor action. Reporting payments made under the DAS as contractual payments on time would also be inaccurate as they were reduced payments under a different arrangement, not the original contract terms. The ombudsman rejected both the investigator's recommendation to remove all adverse information and Mr W's request to backdate a default, as both would misrepresent the account performance.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website