Not upheld: default application and arrears handling; service error regarding misinformation complaint against Bank of Scotland plc, trading as Halifax

Decision detail

Summary

Mr D complained that Halifax treated him unfairly by applying a default on a loan after his bank accounts were frozen by court order, preventing him from making repayments. Halifax had sent appropriate correspondence and attempted contact, but no repayment plan was agreed and the account was closed in June 2025. Halifax upheld the complaint in part, apologizing for incorrect information provided by a branch and offering £50 compensation, but did not uphold the substantive complaint regarding the default. The ombudsman found Halifax's actions were fair and reasonable, as the default was applied within the ordinarily expected timeframe and Mr D's contact with Halifax was inconsistent, preventing agreement on forbearance options. The ombudsman did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman found that Halifax acted reasonably in applying the default because: (1) Mr D was unable to make repayments due to circumstances beyond his control (frozen accounts); (2) Halifax sent appropriate letters and made contact attempts; (3) Mr D's contact with Halifax was inconsistent and he did not provide sufficient information for Halifax to agree to forbearance; (4) a default within three to six months of arrears with no arrangement in place is ordinarily expected and appropriate to ensure accurate credit file reporting; (5) Halifax's £50 payment for the branch misinformation was fair compensation for that service error; and (6) no unfairness under Section 140A of the Consumer Credit Act 1974 was identified.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website