Upheld: administrative error / incorrect credit record marker / unfair impact on mortgage application complaint against First Central Underwriting Limited

Decision detail

Summary

Ms R cancelled her motor insurance policy with First Central and owed an outstanding balance of £12.50. Although Ms R paid this balance promptly when requested, First Central incorrectly placed a late payment marker on her credit record. This marker caused Ms R's mortgage application to be declined, forcing her to take out a more expensive mortgage with a higher interest rate while on maternity leave with two small children. First Central admitted the error and removed the marker, but initially offered only £150 compensation. The ombudsman upheld the complaint and ordered £750 compensation, finding that the firm's error caused considerable distress and inconvenience, and that the firm's failure to investigate the complaint fully added to Ms R's distress over several months.

The Ombudsman's reasoning

First Central made an administrative error by placing a late payment marker on Ms R's credit record after she had paid the outstanding balance promptly. The ombudsman found that but for this error, Ms R's mortgage application would highly probably not have been declined. Ms R suffered significant impact including a declined mortgage application, forced to take a more expensive mortgage, multiple hard searches on her credit record, and increased financial burden during maternity leave. The firm's failure to investigate the complaint fully added to Ms R's distress. The ombudsman applied FOS published guidance on compensation for considerable distress, upset, worry and significant inconvenience lasting over weeks or months, determining £750 was fair and reasonable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website