Upheld: system error in credit application processing and credit file management complaint against Marks & Spencer Financial Services PLC

Decision detail

Summary

Miss W applied for an M&S Sparks Pay account on 4 February 2023, which was wrongly declined due to a system error. M&S discovered the error on 17 October 2025 and offered to remove the credit reference agency hard search from her file. Miss W complained that the error had adversely affected her credit file for over two and a half years and requested £200 compensation. M&S upheld the complaint and offered £25, later increased to £50. The ombudsman upheld the complaint but found £50 was fair compensation, reasoning that the hard search would have appeared on her credit file even if the application had been approved, and there was no evidence of actual financial loss or impact on subsequent lending applications.

The Ombudsman's reasoning

The ombudsman found that while M&S made an error in declining the application, the hard search itself would have appeared on Miss W's credit file even if the application had been approved. Therefore, the error did not result in additional adverse information on her credit file. The ombudsman acknowledged that Miss W suffered distress and inconvenience from 17 October 2025 when she learned of the error, particularly because M&S's initial notification did not clarify that the hard search would have appeared regardless. However, M&S's detailed final response explaining that hard searches have minimal impact likely tempered her concerns. The ombudsman found no persuasive evidence of financial loss or ongoing damage to Miss W's credit file or adverse impact on subsequent lending applications.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website