Partially upheld: Irresponsible lending complaint against Bank of Scotland plc

Decision detail

Summary

Miss N complained that Bank of Scotland plc wrongfully defaulted her account in July 2025. She had been in arrears since at least June 2024, entered a repayment arrangement in October 2024, but broke it by underpaying in January 2025. Although she made up the shortfall, BoS told her on 5 February 2025 that the arrangement had failed and the account would likely default. BoS gave Miss N false hope by suggesting the £200 payment might prevent default and later sent an incorrect letter saying her plan was completed. When Miss N failed to contact BoS as promised on 9 July 2025, the account was defaulted on 18 July 2025. The ombudsman partially upheld the complaint, finding the default itself was fair given the circumstances, but awarding £150 additional compensation for distress caused by BoS's misleading communications and agreeing to backdate the default to 31 January 2025 to reduce credit file impact.

The Ombudsman's reasoning

The ombudsman found that while the account should have defaulted earlier (by mid-February 2025 at the latest), the eventual default on 18 July 2025 was fair because Miss N had been in arrears for over a year, had broken a payment arrangement six months prior, had been explicitly told the account would likely default, and failed to contact BoS when she said she would. However, BoS gave Miss N false hope by suggesting the £200 payment might prevent default and incorrectly told her the plan was completed, causing distress. The ombudsman awarded additional compensation for this distress and agreed to backdate the default to 31 January 2025 to reduce the credit file impact, but declined to remove the default entirely or return the debt from the DCA as this would not be proportionate.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website