Not upheld: unfair default and account closure complaint against Lloyds Bank PLC

Decision detail

Summary

Mrs C complained that Lloyds unfairly defaulted her current account after withdrawing her arranged overdraft in February 2025 and closing the account in June 2025 with an unarranged overdraft balance of approximately £2,500. Mrs C argued Lloyds had not made reasonable efforts to contact her and that she held savings with the bank that could have repaid the balance. The ombudsman found that Lloyds was entitled to withdraw the overdraft after the account had been overdrawn for three months with no payments received and no response to multiple contact attempts made via Mrs C's chosen communication preference. The ombudsman also found the default was properly registered in accordance with ICO guidance and that Lloyds sent required notices. The complaint was not upheld and the default remains on Mrs C's credit file.

The Ombudsman's reasoning

The ombudsman found that Lloyds was entitled to withdraw the arranged overdraft after the account had been overdrawn for three months with no payments received and no response to multiple contact attempts made in line with Mrs C's communication preferences. The default was properly registered in accordance with ICO guidance (at six months arrears) and Lloyds sent required notices. The ombudsman rejected arguments that Lloyds should have used alternative contact methods or offset Mrs C's savings, as the former was not required and the latter would have resulted in a default regardless. The ombudsman also found no error in the dual reporting on the credit file, as Lloyds' record is not live and the third party is responsible for reporting the sold debt.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website