Not upheld: loan default and account closure following arrears complaint against Barclays Bank UK PLC

Decision detail

Summary

F, a limited company, complained that Barclays unfairly defaulted its Bounce Back Loan and closed its business current accounts. F had missed multiple loan repayments from July 2024 onwards, and a short-term repayment arrangement agreed in December 2024 failed when F did not make the first payment. On 2 January 2025, Barclays told Mr C (F's director) that an income and expenditure assessment was required before any further forbearance could be considered, but Mr C did not call back to complete it. After the formal demand expired, Barclays defaulted the loan and closed the accounts. The ombudsman did not uphold the complaint, finding that Barclays had clearly explained what was required, that Mr C chose not to comply, and that the prolonged arrears and failed arrangement justified Barclays' enforcement action regardless of Mr C's personal circumstances.

The Ombudsman's reasoning

The ombudsman found that Barclays were contractually entitled to expect full and timely repayments, and that missed payments constitute an event of default permitting the lender to call in the loan and restrict or close accounts. The ombudsman was satisfied that Barclays clearly explained during the 2 January call that an income and expenditure assessment was required before any further forbearance could be considered, and that Mr C chose not to call back. The ombudsman concluded that even if such an assessment had been completed, given Mr C's stated lack of income during surgery recovery and the prolonged arrears history, it was unlikely Barclays would have offered a different outcome. The ombudsman noted that while Mr C's personal circumstances were unfortunate, they did not reduce F's contractual payment obligations, and that the government guarantee on the BBL protects the lender, not the borrower, and does not prevent enforcement.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website