Not upheld: account closure, overdraft management, and debt management plan handling complaint against Nationwide Building Society

Decision detail

Summary

Miss H complained that Nationwide unfairly closed her account and transferred her overdraft to collections after she entered a debt management plan with StepChange. Nationwide had proactively offered support regarding her consistently overdrawn account. Upon receiving notification of the DMP, Nationwide moved the account to collections, froze it, and recorded a default. The ombudsman found these actions to be reasonable and in line with regulatory obligations and industry practice, as they prevented further indebtedness and ensured proper debt management. While Nationwide acknowledged a service failure when Miss H attempted to access £100 and was not fully informed of required checks, the £50 compensation paid was deemed adequate. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the principle that firms must exercise forbearance and due consideration when customers experience financial difficulties. However, the ombudsman found that Nationwide's actions were reasonable: the proactive contact and support offered met regulatory obligations; moving the account to collections upon DMP notification is common industry practice and appropriate; closing the account and freezing interest/charges is standard practice to prevent further indebtedness; and the firm's right to set its own customer acceptance policies is not unreasonable provided decisions are fair and non-discriminatory. The £50 compensation for the service failure regarding branch access was deemed proportionate.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website