Not upheld: account transfer to recoveries and account restriction following missed loan repayments complaint against National Westminster Bank Public Limited Company (NatWest)

Decision detail

Summary

Mr P, a sole trader, obtained a £7,500 Bounce Back Loan from NatWest in June 2020. After experiencing financial difficulties in 2024-2025, he fell into arrears on the loan. NatWest sent warning letters in May and June 2025 to the correct postal address, issued a formal demand on 24 June 2025, and subsequently transferred the account to recoveries and restricted Mr P's business current account. Mr P complained that he received no prior notification before the account was transferred and restricted, preventing him from conducting business. The ombudsman found that NatWest had taken reasonable steps to notify Mr P and that the actions taken were in line with the contractual terms and constituted a fair process, therefore not upholding the complaint.

The Ombudsman's reasoning

The ombudsman found that NatWest took reasonable steps to notify Mr P by sending letters to the correct postal address in May and June 2025, which clearly warned of potential recovery action. The ombudsman held that even if Mr P did not receive the letters, he should have been aware of missed payments as the account holder and should have contacted NatWest to discuss the position. The ombudsman concluded that NatWest's actions were in line with the contractual terms of both the loan and business current account, and that following a formal demand and prior warning, the transfer to recoveries and account restriction were fair and not unfair, regardless of the significant impact on Mr P's business operations.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website