Upheld: administrative error - failure to automatically close account complaint against Embark Investment Services Limited

Decision detail

Summary

Mr W opened a General Investment Account with Embark on 28 February 2023 that was never funded. The account moved to 'closing' status in July 2023 and should have automatically closed by January 2024, but Embark's automated process failed and the account remained open until June 2025 - approximately 17 months longer than required. Mr W was unaware of the error until discovering it on 25 June 2025, after which he contacted Lloyds Bank and the account was closed within three working days. Embark initially offered £50 compensation, which Mr W rejected, arguing the compensation did not reflect the impact, particularly given his physical impairments affecting fine motor control and mobility. The ombudsman upheld the complaint and increased the compensation to £150, recognising that while the material distress occurred only during the resolution period, Mr W's physical impairments made the administrative burden significantly more onerous than for other customers, warranting an uplift in compensation.

The Ombudsman's reasoning

The ombudsman found that while Embark made a clear administrative error in failing to automatically close the account, the material period of distress and inconvenience was only from when Mr W discovered the error (25 June 2025) until it was resolved, not the entire 17-month period during which he was unaware of the problem. However, the ombudsman recognised that the discovery of the prolonged error, combined with the administrative steps required to resolve it, caused frustration and inconvenience. Critically, the ombudsman found that Mr W's physical impairments made these administrative tasks significantly more burdensome than for other customers, warranting an uplift in compensation. The ombudsman applied principles of fairness toward customers with protected characteristics and additional needs under the Equality Act 2010, though not making a legal determination on breach. The £150 award was considered fair and reasonable within FOS guidance for cases involving a larger single mistake requiring reasonable effort to resolve.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website