Not upheld: Arrears management and account closure on Bounce Back Loan complaint against Lloyds Bank PLC

Decision detail

Summary

R, a limited company, complained that Lloyds Bank unfairly treated its Bounce Back Loan as being in arrears, defaulted the loan, closed the business account, and transferred the debt to recoveries. Mr B, R's director, claimed he had always ensured the account was funded on the payment due date and was unaware of Lloyds' requirement for cleared funds to be available before a cut-off time. The ombudsman found that multiple loan repayments were genuinely missed because insufficient funds were available when Lloyds attempted to collect them, and by January 2025 the loan was in prolonged arrears meeting the default criteria. Accordingly, the ombudsman found Lloyds acted fairly in issuing the formal demand and transferring the account to Recoveries, and did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman found that R's BBL did fall into arrears because although Mr B funded the account on the day payments were due, the loan required cleared funds to be available when Lloyds attempted to take payment. On several occasions insufficient funds were available, and on some months no funds were provided at all. By January 2025, the loan was in multiple and prolonged arrears, meeting the default criteria in the loan agreement. Lloyds therefore fairly issued the formal demand and transferred the account to Recoveries. The ombudsman found no evidence that Lloyds staff were rude to Mr B and noted that Mr B's responsibility as director was to monitor the account and ensure arrears were cleared. The ombudsman also noted that the complaint was brought on behalf of R (a limited company) and therefore could only consider impact on the company, not personal distress to Mr B.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website