Not upheld: direct debit indemnity claim handling and poor service in account switching complaint against Monzo Bank Limited

Decision detail

Summary

Mr K complained that Monzo failed to promptly apply his direct debit indemnity after a cancelled direct debit was reactivated by his former bank and taken while he was abroad, leaving him without funds to return home. Monzo acknowledged service failures including a three-day delay in processing the indemnity claim and poor communications, and paid £180 compensation. Mr K claimed £4,300 in losses including trip costs, lost earnings, and mental health impact. The ombudsman found the complaint not upheld, determining that the former bank was responsible for the direct debit reactivation, not Monzo, and that the £180 compensation fairly reflected the distress and inconvenience from Monzo's service errors without covering losses that would have been incurred regardless.

The Ombudsman's reasoning

The ombudsman found that the originating cause of the issue was the former bank's failure to cancel the direct debit, not Monzo's error in acting on information received. While Monzo made service errors including delayed indemnity processing and poor communications, these errors did not cause the full losses claimed by Mr K. The compensation should reflect distress and inconvenience from Monzo's poor service, not the full cost of the holiday or lost earnings, which would have been incurred regardless. The £180 compensation fairly reflects the impact of Monzo's service failures.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website