Upheld: loan administration error; delay in processing payment date change; incorrect payment recognition and automated chaser notifications complaint against Monzo Bank Limited
Financial Ombudsman decision DRN-6180064 of 2026-05-12T00:00:00+00:00. loan administration error; delay in processing payment date change; incorrect payment recognition and automated chaser notifications complaint against Monzo Bank Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6180064 |
|---|---|
| Decision date | 2026-05-12T00:00:00+00:00 |
| Firm | Monzo Bank Limited |
| Product | personal loan |
| Claim type | loan administration error; delay in processing payment date change; incorrect payment recognition and automated chaser notifications |
| Outcome | Upheld |
| Remedy | Monzo must: (1) refund the £316.77 payment received on 19 June 2025; (2) apply 8% simple yearly interest on the refund calculated from the date Mr H made the payment to the date of refund; (3) pay Mr H £250 total additional compensation for trouble and inconvenience (comprising the £100 already offered for processing delay plus £150 for the incorrect payment recognition issue), payable within 28 days with 8% simple yearly interest if paid late |
Summary
Mr H complained that Monzo delayed processing his request to change his loan payment date from the 18th to the 31st of each month and subsequently sent him arrears notifications despite payments being made. The delay in processing the change until 21 May 2025 meant the May payment fell due before the change took effect. More significantly, Monzo's system failed to recognise a standing order payment made on 19 June 2025 as the June payment because it was received early, instead treating it as a lump-sum payment, which caused Monzo to chase Mr H multiple times and resulted in him making an unnecessary additional payment of £317 on 15 July 2025. The ombudsman upheld the complaint and ordered Monzo to refund the £316.77 payment plus interest and pay £250 in total compensation, rejecting Mr H's requests to write off or significantly reduce the loan balance as excessive.
The Ombudsman's reasoning
The ombudsman found that while Monzo's use of automated chasers for late payments is reasonable practice, there was a specific error in how Monzo's system handled the 19 June 2025 payment made by standing order. The system failed to recognise this payment as the June payment because it was received early, instead treating it as a lump-sum payment. This caused Monzo to incorrectly chase Mr H for a payment that had already been made, resulting in Mr H making an unnecessary additional payment. The ombudsman rejected Mr H's requests to write off the loan or reduce the balance significantly, finding such remedies excessive for the errors that occurred. The ombudsman upheld the complaint to the extent of the refund, interest, and compensation already offered by Monzo and recommended by the investigator.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Monzo Bank Limited, all decisions | 149 | 10% |
Source
Read the original decision on the Financial Ombudsman Service website