Not upheld: unfair default reporting / forbearance adequacy complaint against HSBC UK Bank Plc

Decision detail

Summary

Miss N complained that HSBC unfairly defaulted her loan account during a period of financial difficulty, arguing that a payment break agreement should have prevented the default. HSBC had provided two breathing space periods totaling six months (May-October 2024) with suspended interest and charges, and agreed a longer-term no affordability plan in October 2024. However, HSBC explicitly warned Miss N that despite the plan, a default notice and final demand could be issued if she could not maintain payments. When Miss N was unable to pay the amounts required by the specified deadlines and her account reached 6 months in arrears by December 2024, HSBC reported the default to credit reference agencies. The ombudsman found that HSBC had treated Miss N with adequate forbearance and due consideration, and that the default was reported in accordance with regulatory guidance, so the complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that HSBC provided adequate forbearance by granting multiple payment breaks totaling six months (May-October 2024) and suspending interest and charges during these periods, in compliance with CONC 7.3.4R and 7.3.5G. HSBC clearly communicated to Miss N on 17 October 2024 that despite the no affordability plan, a default notice and final demand could be issued and her account could be defaulted if she could not pay. Since Miss N's circumstances had not improved and she was unable to meet the payment demands by the specified dates, the account reached 6 months in arrears by early December 2024, which aligns with ICO guidance for default reporting. Therefore, the default was reported fairly and in accordance with regulatory guidance.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website