Not upheld: wrongful default and failure to provide information complaint against National Westminster Bank Plc

Decision detail

Summary

H, a company, complained that NatWest wrongly defaulted its bounce back loan and failed to provide information about it. The loan had been extended in September 2023 and a payment holiday was granted in August 2024. When H missed payments in February and March 2025, NatWest declared the loan in default on 9 May 2025 and demanded full repayment. H argued there were no arrears when the demand was made, as a payment covering three months had been made on 8 April 2025. The ombudsman found that the default was valid under the loan agreement's terms, as the February payment was not made within the required grace period, triggering an Event of Default before the April payment was received.

The Ombudsman's reasoning

The ombudsman found that under clause 8.1 of the loan agreement, an Event of Default occurred when the February payment (due 12 February 2025) was not paid by 12 March 2025. Under clause 7.1, NatWest was contractually entitled to demand immediate repayment upon an Event of Default. The ombudsman rejected the argument that the 8 April payment brought the account up to date, as the February payment had already triggered the default clause before that payment was made. While the ombudsman acknowledged that V received incorrect information from customer service, this did not invalidate the bank's valid contractual right to demand repayment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website