Not upheld: poor customer service, misinformation about debt status, delayed resolution, inadequate compensation complaint against Lloyds Bank PLC

Decision detail

Summary

Mr M2 complained on behalf of his late father's estate that Lloyds failed to promptly confirm whether an outstanding mortgage shortfall debt had been written off following Mr M1's death from terminal illness. Although Lloyds had sent a letter on 26 June 2025 confirming the debt write-off, Mr M2 did not receive or see it, and Lloyds staff provided contradictory information over the following five months, delaying estate administration and causing Mr M2 significant distress, financial strain, and impact on his mental health. Lloyds paid £500 in compensation, but Mr M2 sought £2,000-£5,000, arguing the case was comparable to other FOS awards involving bereavement and debt misinformation. The ombudsman declined to uphold the complaint, finding it had no statutory power to award compensation to Mr M2 personally since the complaint was brought on behalf of the estate, and no direct financial loss to the estate had been identified.

The Ombudsman's reasoning

The ombudsman found that while Mr M2 had experienced genuine distress and poor service from Lloyds, the complaint was brought on behalf of the estate of Mr M1, not on behalf of Mr M2 as an individual customer. Under the legislation governing the FOS, compensation can only be awarded to the complainant for losses suffered. Since the complainant is the estate (not Mr M2 personally), and Mr M2 identified no direct financial losses to the estate caused by Lloyds' delays, the ombudsman had no power to award compensation for Mr M2's personal distress, inconvenience, or impact on his health and wellbeing. The ombudsman emphasised this restriction comes from legislation, not FOS policy, and therefore cannot be changed by the ombudsman or FOS.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website