Not upheld: Account restrictions and unreasonable use of set-off complaint against Lloyds Bank Plc

Decision detail

Summary

S, represented by its director Mr S, complained that Lloyds unreasonably restricted their accounts and offset outstanding debts against a Bounce-Back Loan that had fallen into arrears. The BBL had been in arrears since January 2024, and although an initial arrangement was made, S continued to miss payments despite multiple agreements to repay. In September 2024, Lloyds issued a Formal Demand warning that failure to repay could result in account restrictions and moving to recoveries. When S continued to miss payments, Lloyds restricted the accounts in January 2025 and used set-off to offset the outstanding debt. The ombudsman found that Lloyds had provided reasonable forbearance, that S had been adequately warned, and that the set-off was permitted under the account terms, therefore not upholding the complaint.

The Ombudsman's reasoning

The ombudsman found that Lloyds had provided requisite forbearance by entering into several agreements to help S get the account back on track. However, S repeatedly failed to meet its obligations and missed payments continued even after the September 2024 Formal Demand which clearly warned of potential account restrictions. The set-off was permitted under the terms of both the current account and BBL agreements, which S had entered into with clear notice of this possibility. Given the considerable arrears and repeated breaches of payment agreements, the ombudsman concluded that restricting the accounts and applying set-off was proportionate and not unfair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website