Not upheld: unfair default of overdraft account complaint against Monzo Bank Limited

Decision detail

Summary

Mrs K complained that Monzo unfairly defaulted her overdraft account in September 2025 after she exceeded her arranged limit in May 2025 and made no payments for over 120 days. She argued the default was disproportionate given her exceptional circumstances and vulnerabilities. Monzo defended its action as compliant with industry standards and ICO guidance. The ombudsman found that Monzo had sent required notices, Mrs K had not responded or made payments, and the default was recorded in accordance with ICO guidance (which expects defaults to be registered by six months of arrears). The ombudsman upheld that credit files must accurately reflect payment history regardless of the reasons for non-payment and therefore did not direct Monzo to remove the default.

The Ombudsman's reasoning

The ombudsman found that Monzo complied with ICO guidance by defaulting the account when Mrs K was between three and six months in arrears. Monzo had sent required notices and Mrs K had not responded or made payments. While acknowledging Mrs K's exceptional circumstances and vulnerabilities, the ombudsman determined that a credit file must accurately reflect payment history regardless of the reasons for non-payment, and therefore Monzo did not act wrongly in recording the default.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website