Not upheld: default registration timing and credit file impact complaint against NewDay Ltd

Decision detail

Summary

Mr H complained that NewDay Ltd failed to register a default on his credit card account at the appropriate time, causing him difficulties with mortgage applications. He argued the default should have been registered in August 2019 when his account was six months in arrears, rather than November 2021. NewDay defended its actions, noting it had agreed repayment arrangements, re-aged the account when Mr H maintained payments, and registered the default only after 180 days of arrears in line with ICO guidelines. The ombudsman found NewDay acted fairly and reasonably by exercising forbearance on a relatively small debt (approximately £45 over a £300 limit) and giving Mr H multiple opportunities to avoid default through repayment plans, interest suspension, and account re-aging. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that NewDay's policy of waiting 180 days before registering a default is in line with ICO guidelines and that NewDay appropriately exercised forbearance by working with Mr H to avoid default through repayment arrangements, interest suspension, and account re-aging. While the default would have fallen off Mr H's credit file sooner had it been registered in August 2019, the ombudsman considered it reasonable for NewDay to give Mr H a chance to clear the relatively small debt without a default, particularly given his demonstrated commitment to repayment through 2020. The deterioration in 2021 and eventual default after 180 days of arrears was found to be fair and in line with industry guidelines.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website