Partially upheld: improper default notice procedure and account assignment timing complaint against Fairscore Ltd trading as Updraft

Decision detail

Summary

Mr M complained that Fairscore improperly defaulted two loan accounts before the notice period ended and assigned them to a third party creditor (T) without giving him a full opportunity to remedy the breach. The accounts had been in arrears for over five months and nine months respectively when default notices were issued in January 2024 with an arrears due date of 5 February 2024. Fairscore defaulted the accounts before this date as part of the assignment to T effective 29 January 2024, and Mr M was not notified of the assignment until 12 February 2024. The ombudsman found the default notices were fairly issued in line with ICO guidance and that Mr M's consumer rights were not materially impacted by the assignment, as he could have cleared the arrears if financially able and was unaware of the assignment during the notice period. The complaint was partially upheld with £50 compensation awarded for the early defaulting.

The Ombudsman's reasoning

The ombudsman found that default notices were fairly issued in line with ICO guidance after accounts were in arrears for considerable periods. While Fairscore should have defaulted accounts on 5 February 2024 rather than earlier in January 2024, the early defaulting did not materially impact Mr M because: (1) he was not aware of the assignment until after the arrears due date had passed; (2) he was unable to clear arrears regardless; (3) he did not attempt to contact Fairscore during the notice period; and (4) early defaulting actually benefits Mr M as defaults will fall off his credit file sooner. The ombudsman clarified it has no power to declare default notices legally invalid or unenforceable, which is a matter for courts.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website