Not upheld: unfair termination and default reporting complaint against Ikano Bank AB (publ)

Decision detail

Summary

Mr C complained that Ikano Bank AB unfairly terminated his loan account and reported a default to credit reference agencies after he missed several payments. Ikano issued a default notice on 21 May 2025 requiring Mr C to pay £187.50 in arrears by 18 June 2025. Mr C initiated a bank transfer on 18 June 2025, but the payment did not clear until 19 June 2025. Ikano then terminated the agreement and reported a default. The ombudsman found that the default notice was valid and clearly warned that payments could take up to five working days to clear, and that Mr C should allow for this when making a payment. Since Mr C's payment did not clear by the deadline, he had not complied with the default notice requirements, and Ikano fairly terminated the agreement and reported the default. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that the default notice was valid and gave Mr C significantly more than the statutory 14 days required to remedy the breach. The notice clearly warned that payments could take up to five working days to clear and that Mr C should allow for this when making a payment. Although Mr C initiated the payment on the deadline date of 18 June 2025, the payment did not actually clear until 19 June 2025. Therefore, Mr C had not complied with the default notice requirements by the deadline. The ombudsman rejected Mr C's argument that Ikano should have waited five working days after the deadline before registering the default, as the default notice made clear that Mr C needed to arrange payment early enough to ensure it cleared by the deadline. The ombudsman found no evidence of internal processing errors by Ikano and concluded that Ikano fairly terminated the agreement and reported the default.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website