Not upheld: default registration, refund processing delay, and irresponsible lending complaint against Tesco Personal Finance Limited trading as Tesco Bank

Decision detail

Summary

Mr H complained that Tesco delayed issuing a refund of £617.82 for interest and default fees, which led to his credit card account defaulting in August 2024. He argued that if the refund had been applied earlier, it would have cleared his arrears and prevented the default. He also claimed his minimum payments were inflated due to the incorrect charges and that Tesco failed to provide support despite his difficult personal circumstances. The ombudsman found no evidence that Tesco identified the refund before October 2024, and that even if applied earlier, the refund would not have cleared the arrears as it was properly allocated to the overall balance under the terms and conditions. The ombudsman concluded the interest and fees formed only a small proportion of the balance and were not the main cause of the arrears, which resulted primarily from Mr H's missed payments from February 2024 onwards. The default was fairly registered in line with regulatory expectations, and Tesco could not be expected to provide additional support without knowledge of Mr H's vulnerability, which was only disclosed after the default had been applied.

The Ombudsman's reasoning

The ombudsman found that Tesco did not delay the refund as there was no evidence it was identified before October 2024. Although the refund amount exceeded the arrears at default, Tesco's terms clearly stated refunds would be applied to the overall balance, not directly to arrears. The interest and fees of £617.82 over two years formed only a small proportion of the overall balance and were not the sole or main cause of the arrears. Even removing all interest and fees, Mr H still missed required payments, particularly from February 2024 onwards. The default was fairly registered in line with ICO expectations for accounts three to six months in arrears. Tesco met its communication obligations and could not be expected to provide additional support without knowledge of Mr H's vulnerability, which was only disclosed in September 2024, after the default had already been applied.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website