Not upheld: unfair default of loan account complaint against Lloyds Bank PLC

Decision detail

Summary

Mr G complained that Lloyds Bank PLC unfairly defaulted his loan in September 2025 after he sought forbearance due to financial difficulties beginning in January 2025. Lloyds had implemented supportive measures including a 30-day hold period and a zero repayment plan, but Mr G's circumstances did not improve. In August 2025, Lloyds offered a further 30-day hold which it later acknowledged was an administrative error. The ombudsman found that while the error caused confusion, it did not materially affect the outcome, as Mr G had consistently reported ongoing financial difficulty with no prospect of improvement and the loan was several months in arrears. The ombudsman upheld Lloyds' decision to default the loan as fair and reasonable, and found the £70 compensation for the administrative error to be appropriate.

The Ombudsman's reasoning

The ombudsman found that while Lloyds made an administrative error in offering a further 30-day hold in August 2025, this error did not materially affect the outcome. Given that Mr G had consistently reported ongoing financial difficulty with no prospect of improvement, the loan was several months in arrears, and forbearance measures had already been exhausted, defaulting the loan was a reasonable and proportionate course of action. The ombudsman noted that banks are not obliged to perpetually continue forbearance measures if there is no real prospect of circumstances improving or arrears being repaid.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website