Not upheld: mis-selling / incorrect information regarding interest rate complaint against HSBC UK Bank Plc trading as first direct

Decision detail

Summary

Mrs S applied for a personal loan with First Direct, initially seeing a 5.9% APR offer but ultimately signing a contract for 10.9% APR on 8 July 2025. A system error delayed fund release, and during a subsequent phone call, a call handler allegedly quoted the lower 5.9% rate, which Mrs S believed was the agreed rate. When she discovered the actual rate was 10.9%, she complained that she had been given wrong information and would have borrowed on her mortgage instead if she had known the true rate. First Direct upheld the complaint and paid £300 compensation. The ombudsman found that Mrs S had signed the 10.9% contract before any errors occurred and that it would not be fair to amend the binding contractual rate based on subsequent verbal information, though the ombudsman acknowledged First Direct's poor service caused distress.

The Ombudsman's reasoning

The ombudsman found that Mrs S signed a binding contract for 10.9% APR before any system errors occurred, as evidenced by timestamped audit logs. Although First Direct provided poor customer service and gave incorrect information about the interest rate in a subsequent phone call, the ombudsman determined it would not be fair to amend a binding signed contractual rate based on verbal information given after the contract was already executed. Mrs S should have been aware from the previous day's call that the error related to the direct debit setup, not the loan agreement itself. The ombudsman acknowledged First Direct's poor service caused distress and inconvenience, but found the £300 compensation already paid was appropriate and proportionate.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website