Not upheld: unfair credit file reporting / enforceability of debt complaint against Cabot Credit Management Group Limited trading as Cabot Financial (Europe) Limited

Decision detail

Summary

Mr N complained that Cabot Financial was unfairly reporting his defaulted debt account to credit reference agencies, arguing the debt was unenforceable because the original credit agreement had not been supplied. Cabot had taken over servicing of the account after it was sold by the original lender V, and refused Mr N's request to remove the default, instead offering £150 compensation and updating the status to 'partially settled'. The ombudsman found the complaint not upheld, reasoning that only a court can determine if a debt is irrevocably unenforceable, and that continuing to report the account reflects factual information about money owed and repayment history, whereas removing it entirely would present an incomplete and potentially inaccurate picture of creditworthiness.

The Ombudsman's reasoning

When a debt company takes over servicing of an account, they inherit responsibility for reporting it to credit reference agencies. Although the account may be temporarily unenforceable, only a court can determine if it is irrevocably unenforceable. There is no mechanism within current reporting systems to flag an account as temporarily unenforceable, and removing the account entirely would present an incomplete and inaccurate picture of creditworthiness, potentially amounting to credit washing. The reported information reflects factual data about money owed and repayment history. Even if enforceability is confirmed by a court, this does not prevent the creditor from requesting repayment or treating the debtor as owing the money.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website