Partially upheld: unfair default reporting and debt collection practices; alleged failure to treat vulnerable customer with forbearance complaint against Clydesdale Bank Plc trading as Virgin Money

Decision detail

Summary

Mr A complained that Virgin Money treated him unfairly by applying interest after his promotional rate ended, reporting arrears to credit reference agencies, and defaulting his account while he faced exceptional personal circumstances including bereavement and being abroad without reliable communication. Mr A had left the UK in early 2025 and missed payments from March 2025 onwards, eventually being defaulted in October 2025 after nine months in arrears. The ombudsman found Virgin acted fairly in applying interest and reporting arrears, as it had clearly notified Mr A of the rate change and was unaware of his difficulties until May 2025. However, the ombudsman partially upheld the complaint by requiring Virgin to backdate the default to 8 August 2025 (six months in arrears) rather than 9 October 2025, finding this aligned better with good practice guidance, though no other remedies were ordered.

The Ombudsman's reasoning

The ombudsman found Virgin acted fairly in applying interest after the promotional period ended because it clearly communicated the end date and Mr A did not repay the balance before expiry. Virgin was not aware of Mr A's personal difficulties until May 2025, so could not have acted differently earlier. While Virgin gave breathing space after learning of difficulties, it was reasonable to default the account after Mr A failed to resume payments and had been in arrears for an extended period. However, the ombudsman found it would have been fairer to default the account by six months in arrears (September 2025, or backdated to 8 August 2025 from Mr A's last payment in February 2025) rather than at nine months in arrears (October 2025). The ombudsman rejected arguments that Consumer Duty obligations prevented reporting the default, as the default was factually correct and guidance does not prevent reporting when customers face difficulties.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website