Not upheld: unfair default and credit file reporting complaint against Barclays Bank UK PLC trading as Tesco Bank

Decision detail

Summary

Ms F complained that Tesco Bank unfairly defaulted her personal loan account in December 2021 and reported 31 missed payment markers to credit reference agencies, despite her claiming she had a COVID-19 payment break and continued making payments. Ms F also complained about her vulnerability (post-natal depression and mental health crisis) not being considered and about Tesco Bank deleting complaint correspondence. The ombudsman found that Ms F was ineligible for the COVID-19 payment break because her account was already in arrears before the pandemic guidance was issued, and that the account legitimately remained in arrears from March 2019 onwards. Although the account remained in arrears for over 30 months before defaulting, the ombudsman found this delay was reasonable because Tesco Bank showed forbearance through payment breaks and repayment plans, and by October 2021 it was clear the £1,611 arrears would not be repaid within a reasonable timeframe. The ombudsman upheld Tesco Bank's accurate reporting of arrears to credit reference agencies and found no evidence of unfair treatment regarding the retention of complaint correspondence.

The Ombudsman's reasoning

The ombudsman found that Ms F's account was legitimately in arrears from March 2019 onwards because she was not eligible for the COVID-19 payment break (her account was already in arrears when the guidance was issued). Although the account remained in arrears for over 30 months before defaulting (longer than ICO guidance suggests), the ombudsman considered this delay was reasonable because Tesco Bank showed forbearance by agreeing payment breaks and repayment plans. By October 2021, it was clear the arrears of £1,611 would not be repaid within a reasonable timeframe given Ms F's circumstances, making the December 2021 default fair and reasonable. The ombudsman also found that Tesco Bank was required to accurately report the arrears status to credit reference agencies each month, regardless of Ms F's vulnerability or the reasons for non-payment. The ombudsman noted that Tesco Bank did attempt to support Ms F through forbearance measures.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website