Upheld: unfair debt collection practices and account management complaint against Zilch Technology Limited

Decision detail

Summary

Mrs N complained that Zilch passed her account to a debt resolution agency despite her agreeing to set up a repayment plan. Zilch sent notifications on 1, 7, and 9 October 2025 warning that the account would be passed over if no action was taken, with the original timeframe being 15 days. Mrs N contacted Zilch on 11 October 2025 requesting a repayment plan and engaged in negotiations about the payment amount until confirming £50 per month on 15 October 2025. However, Zilch stated the account had already been passed to the debt resolution agency on 13 October 2025 because it was overdue by more than 70 days. The ombudsman upheld the complaint, finding it unreasonable for Zilch to pass the account over while Mrs N was actively engaging to set up the repayment plan, and ordered £100 compensation for distress and inconvenience.

The Ombudsman's reasoning

The ombudsman found that while the original notification stated contact needed to be made within 15 days (not necessarily that a repayment plan must be set up within that timeframe), Mrs N did make contact on 11 October 2025 and was actively engaging with Zilch to arrange the repayment plan. The subsequent notifications created confusion about whether the repayment plan itself needed to be finalized within the timeframe. Regardless of this confusion, the ombudsman agreed it would have been reasonable for Zilch to hold off passing the account to a debt resolution agency while Mrs N was clearly engaged and attempting to set up the repayment plan as requested. The fact that Zilch subsequently agreed to a repayment plan demonstrates this was achievable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website