Not upheld: Card / payment disputes complaint against Starling Bank Limited

Decision detail

Summary

F, a limited company, complained that Starling Bank Limited unfairly refused to accept a Bill of Exchange as settlement of its Bounce Back Loan on 6 March 2025 and incorrectly continued treating the loan as outstanding, applying a default and taking a further payment. Mr C, F's director, argued the Bill of Exchange was a valid payment instrument under the Bills of Exchange Act 1882 and that Starling's failure to issue a notice of dishonour meant the debt was settled. The ombudsman rejected this complaint, finding that the loan agreement required repayment in sterling and cleared funds, which F had agreed to, and that the Bill of Exchange did not provide equivalent value or security to Starling. The ombudsman concluded Starling acted fairly in refusing the Bill of Exchange, treating the loan as outstanding, applying arrears procedures and a default, and taking the £115.88 payment.

The Ombudsman's reasoning

The ombudsman determined that Starling acted reasonably in refusing the Bill of Exchange because: (1) the loan agreement explicitly required repayment in sterling and cleared funds, which F agreed to; (2) the Bill of Exchange did not represent funds immediately available to Starling and exposed them to unrecoverable debt risk; (3) accepting it would have violated the contractual terms; (4) as the loan remained outstanding due to non-payment, Starling fairly applied arrears procedures and a default; (5) Starling's responses were sufficiently clear and they were not obliged to engage in detailed legal debate or provide information about loan fund sources.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website