Upheld: incorrect default registration and credit file reporting complaint against Ikano Bank AB (publ)

Decision detail

Summary

Mr J complained that Ikano Bank incorrectly registered a default on his credit file, which he claimed was the sole reason his mortgage application was declined. Mr J took out a loan in April 2024 due in September 2024 but missed three payments, resulting in a default being registered. Ikano later acknowledged it had made an error as the account had been brought up to date by the time the default was issued. The ombudsman upheld the complaint but rejected Mr J's claim for substantial compensation, finding that while Ikano's error caused distress, there was insufficient evidence it was the sole cause of the mortgage decline, given the presence of two other defaults and three correctly recorded missed payments on his credit file. The ombudsman found Ikano's offer of £400 compensation and removal of the default to be fair and reasonable.

The Ombudsman's reasoning

While Ikano made an error in registering the default too early, the ombudsman found insufficient evidence that this was the sole cause of the mortgage application decline. The credit file contained two other historic defaults from separate businesses and three correctly recorded missed payments by Mr J, both of which could have contributed to the lender's decision. The ombudsman noted that credit files are only one factor in lending decisions, and lenders also consider income, outgoings, and recent credit applications. The mortgage adviser's statement did not provide specific evidence from the lender confirming the default was the only reason for decline. Therefore, the ombudsman considered Ikano's offer of £400 compensation and removal of the default to be fair and reasonable recognition of the distress caused by the error.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website