Not upheld: irresponsible lending / unfair treatment in hardship arrangement / default registration during payment plan complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr A complained that HSBC failed to properly explain the consequences of entering a six-month LTNA hardship plan in February 2025, specifically that a default could be registered during the plan period despite being told no payments were required. He claimed a language barrier prevented his understanding and that the default registration was unfair. HSBC did not uphold the complaint, and the ombudsman agreed, finding that the agent clearly explained during the call that arrears would accrue, the account would be reported to Credit Reference Agencies, and a default notice and final demand could be issued. The follow-up letter reinforced these points. The ombudsman was satisfied the default was correctly registered in accordance with ICO guidance and that Mr A's financial circumstances made default inevitable.

The Ombudsman's reasoning

The ombudsman found that HSBC clearly explained during the 20 February 2025 call that arrears would continue to accrue, the account would be reported to CRAs, and a default notice and final demand could be issued during the six-month plan period. The follow-up letter reinforced these points. The ombudsman was satisfied that Mr A understood the information despite his claims of language barriers, as he engaged with the agent and confirmed understanding. The default was correctly registered in accordance with ICO guidance recommending defaults after three to six months of arrears. Even if Mr A had not received the default notice and final demand, he would not have been able to pay the required amounts given his financial circumstances.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website