Upheld: unfair refund allocation and unclear terms complaint against NewDay Ltd (trading as Argos Financial Services)

Decision detail

Summary

Mr B purchased £245.99 on a BNPL account with Argos in March 2024 and received a full refund the same month. However, Argos allocated the refund against other outstanding balances rather than clearing the BNPL purchase, leaving the £245.99 balance on Mr B's account with a payment deadline of 11 March 2025. Mr B did not pay, believing the purchase had been refunded, resulting in late fees, interest charges, and credit file reporting. The ombudsman upheld the complaint, finding Argos's Terms and Conditions and statements were insufficiently clear that refunds would be treated as payments and allocated accordingly. However, the ombudsman found shared responsibility as Mr B's statements clearly showed the outstanding balance and deadline, and he should have sought clarification. The ombudsman ordered removal of 50% of interest and fees but rejected amending the credit file as the information was factually accurate.

The Ombudsman's reasoning

The ombudsman found that Argos's Terms and Conditions and statements were not sufficiently clear in explaining that refunds would be treated as 'payments' and allocated against other balances, particularly when the refund was processed within days of purchase. Mr B could reasonably have assumed the £245.99 would simply be cleared. However, the ombudsman also found shared responsibility, as Mr B's statements clearly showed the outstanding balance and 12-month payment deadline, and Mr B should have sought clarification before the due date passed. The ombudsman rejected Mr B's request to amend his credit file as the information was factually accurate and payments were indeed due and unpaid.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website