Not upheld: default reporting accuracy and procedure complaint against Lantern Debt Recovery Services Limited

Decision detail

Summary

Mr M complained that Lantern Debt Recovery Services Limited was improperly reporting a default on his credit file because Lantern could not provide the Notice of Default or proof of service. The account had originally been with lender X, which defaulted it in June 2023 before selling it to Lantern in March 2024. The ombudsman found it reasonable for Lantern to rely on X's records confirming the Notice of Default was issued on 2 April 2023, and that Lantern had appropriately attempted to obtain the document from X's administrators. Given the account had been in arrears for four months with no payments before the default was applied, the ombudsman found the default was properly registered and the complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found it reasonable for Lantern to rely on X's information that a Notice of Default was sent, even though Lantern does not hold the actual document. The ombudsman noted that debt companies typically do not acquire all records when taking over accounts. Given that X's administrators could not provide the Notice of Default due to insolvency, the ombudsman could not reasonably require Lantern to do more. The account had been in arrears for approximately four months with no payments (including no token payments suggesting a payment arrangement) before default was applied, which aligns with Information Commissioner's Office guidance that defaults can typically be registered after three months in arrears. The ombudsman found the default was a factual reflection of how the account was run, not a punishment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website