Partially upheld: account closure, default reporting, administrative error in debt management, and alleged discriminatory treatment complaint against Lloyds Bank PLC

Decision detail

Summary

Mr O complained about Lloyds' closure of his current account, reporting of a CIFAS marker and default, and alleged discriminatory treatment based on race. Lloyds provided 60 days' notice before closing the account in May 2024 and reported a default in August 2024 after Mr O failed to repay an overdraft of £1,593.60. Although Lloyds incorrectly agreed a zero-payment plan in July 2024, the ombudsman found this did not prejudice Mr O as the payment deadline had already passed and his lack of disposable income made default inevitable. The ombudsman partially upheld the complaint, finding Lloyds made service errors in administering the debt and handling discrimination concerns, but acted fairly in closing the account and reporting the default. Compensation of £250 was ordered in addition to £125 already paid.

The Ombudsman's reasoning

The ombudsman found that Lloyds acted reasonably in closing the account with adequate 60 days' notice and in reporting the default, as Mr O's position was not prejudiced by the incorrectly agreed zero-payment plan since the payment deadline had already expired. The ombudsman concluded that Mr O's default was likely inevitable given his lack of disposable income until October 2024. However, the ombudsman found that Lloyds made errors in agreeing the plan when they shouldn't have and handled Mr O's discrimination concerns poorly, particularly in the CEO response call where the staff member's explanation could have been more sensitive. While the ombudsman could not determine whether discrimination occurred, they found the service failures warranted compensation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website