Not upheld: treatment during arrears; refusal of settlement; verification procedures; credit file recording; collection contact complaint against Barclays Bank UK PLC trading as Tesco Bank

Decision detail

Summary

Miss J complained that Tesco Bank failed to treat her fairly when she fell into arrears on a personal loan following serious health problems in October 2024. She argued that the firm should have offered alternative verification methods to a letter of authority, should not have issued a default notice while she was vulnerable, should have accepted a £6,000 settlement offer before default, and should have suspended collection contact. The ombudsman found that Tesco Bank's requirement for a letter of authority was reasonable, that issuing a default notice was justified given the account remained in arrears and the expected LoA was not received, and that the firm's commercial decision regarding settlement was within its discretion. The complaint was not upheld, though the ombudsman reminded Tesco Bank of its obligations to treat Miss J with reasonable forbearance given her circumstances.

The Ombudsman's reasoning

The ombudsman found that Tesco Bank's requirement for a letter of authority was reasonable and that the firm had agreed with the representative to obtain one. Although a second LoA was promised, there was no evidence it was received by Tesco Bank. The ombudsman considered that issuing a default notice was reasonable given the account remained in arrears and the expected LoA had not been received. The firm's commercial decision to only consider reduced settlement after default was within its discretion. While acknowledging the Consumer Duty and obligations to vulnerable customers, the ombudsman found that Tesco Bank had placed holds on the account, applied no additional fees, and had not acted unreasonably. The issues with the LoA did not arise from Miss J's vulnerability but from document delivery problems.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website