Not upheld: Account closure without notice complaint against The Royal Bank of Scotland Public Limited Company (RBS)

Decision detail

Summary

J, a limited company, complained that RBS unfairly failed to apply available funds to its Bounce Back Loan repayments before defaulting the loan, closing its business account, and pursuing debt recovery. The loan had been repaid regularly until May 2025, but no payments were made thereafter. From June 2025 onwards, J's business current account was frequently overdrawn with only short-lived credit balances. RBS attempted to contact J multiple times before issuing a formal demand on 10 September 2025, which triggered default. The ombudsman found that RBS was not obligated to apply discretionary payments when no sustained funds were available, took reasonable steps to contact J, and properly followed standard procedures in defaulting the loan and pursuing recovery. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that RBS was not obligated under the loan agreement to apply discretionary payments to cover missed repayments, particularly when the business current account lacked sustained available funds. The account was generally overdrawn from June 2025 onwards, making it unreasonable to expect RBS to increase an unauthorised overdraft. RBS took reasonable steps to contact J before issuing the formal demand, and Miss M's illness was not communicated to RBS at the time. Once the formal demand was issued, the full outstanding balance became due, and the subsequent set-off and debt recovery actions were consistent with standard practice following default.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website