Upheld: credit reporting inaccuracy and account mishandling complaint against Nationwide Building Society

Decision detail

Summary

Mr M complained about Nationwide Building Society's handling of his loan account and credit reporting following a default notice issued in December 2024 for arrears of £2,882.96. After Mr M contacted Nationwide in January 2025 explaining he was interviewing for a new job, a breathing space hold was approved and extended, but due to a system error, the required payment plan arrangement was not set up, causing the loan to close in default. The ombudsman found Nationwide's error caused inaccurate and confusing credit file reporting, with defaults periodically reappearing despite Mr M's subsequent payment arrangement from April 2025. However, the ombudsman determined Nationwide could have reasonably closed the account in December 2024 based on six payments in arrears per industry guidance, and found no evidence the reporting errors were the key reason for Mr M's credit difficulties. The complaint was upheld with a remedy to backdate the default to December 2024 and maintain the £350 compensation already offered.

The Ombudsman's reasoning

The ombudsman found that Nationwide made a clear error by failing to set up the payment plan arrangement on its systems despite approving breathing space, causing the loan to close in default. However, the ombudsman determined that Nationwide could have reasonably closed the account in December 2024 based on six payments in arrears, which aligns with industry guidance. The ombudsman agreed the credit reporting was inaccurate and confusing due to periodic default reappearance, but found no evidence this was the key reason for Mr M's credit difficulties given his other accounts were also significantly in arrears. The fairest resolution was to backdate the default to December 2024 to allow it to drop off the credit file sooner, combined with the £350 compensation already offered.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website