Upheld: General financial advice complaint against Barclays Bank UK PLC trading as Tesco Bank

Decision detail

Summary

Mr E complained about Tesco Bank's handling of his credit card account after falling into financial difficulty in February 2025. An advisor incorrectly told him on 12 June 2025 that he could avoid a default by clearing arrears, leading him to pay £959 from his limited income. When Tesco later clarified the account could not be reopened, Mr E was left unable to use the account but still liable for interest charges. Although Tesco offered £100 compensation and removed the default, the ombudsman found this did not adequately remedy the situation. The ombudsman upheld the complaint and ordered Tesco to reinstate the default backdated to June 2025, adjust the account balance accordingly, and pay an additional £100 compensation, putting Mr E in the position he would have been in had he received correct advice.

The Ombudsman's reasoning

The ombudsman found that while Tesco was entitled to issue a default notice and terminate the account after three months of arrears in line with ICO guidelines, the advisor's incorrect advice on 12 June 2025 that Mr E could avoid the default by clearing arrears was a clear error. The remedy offered (£100 compensation and removal of default) did not put Mr E in the position he would have been in had he been correctly advised. Had Mr E been correctly told the account was terminated and could not be reopened, he would have accepted the default and agreed a repayment plan, rather than paying £959 from his limited income. Tesco should have known Mr E was in difficulty given the history of discussions, lack of consolidation loan, and pattern of nominal payments. The correct remedy is to default the account as originally planned in June 2025, adjust the balance accordingly, and pay additional compensation for the avoidable inconvenience and stress caused.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website