Not upheld: Early exit penalty / unfair contract terms following merger complaint against Clydesdale Bank Plc trading as Virgin Money

Decision detail

Summary

Mr M complained that Virgin Money should waive an early exit penalty on his ISA following Virgin Money's acquisition by a building society and the subsequent transfer of his account under Part VII procedures on 2 April 2026. Mr M argued the change of provider was imposed on him and cited previous negative experiences with the building society. The ombudsman found the merger was foreseeable from October 2024, the transfer caused no material detriment as account access remained unchanged, and the Court Order governing the transfer specifically limited penalty-free transfers to FSCS limit situations. The complaint was not upheld as Virgin Money was entitled to enforce the existing ISA terms and conditions.

The Ombudsman's reasoning

The ombudsman found that while the change of provider was imposed on Mr M, it was a foreseeable consequence of the October 2024 acquisition. Critically, the transfer caused no material detriment as account numbers, login details, and day-to-day account usage remained unchanged. The ombudsman rejected the argument that Virgin Money's discretion in other circumstances (FSCS limit cases) meant it should waive penalties here, noting the Court Order specifically stipulated which circumstances warranted penalty-free transfers. Mr M's dislike of the new provider based on previous experiences was insufficient grounds to override the agreed ISA terms.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website