Upheld: unfair credit file reporting; inaccurate arrears recording complaint against Bank of Scotland plc

Decision detail

Summary

Mr M complained that Bank of Scotland was recording rolling missed payments on his credit card account despite him making all required payments under a Debt Arrangement Scheme (DAS) that started in July 2021. Bank of Scotland argued it was correctly recording the account as in arrears because Mr M was not making full contractual monthly payments. The ombudsman upheld the complaint, finding that ICO guidance requires lenders to accurately report payment arrangements, and that payments made in line with agreed reduced amounts under a DAS should not be reported as missed payments. The ombudsman ordered Bank of Scotland to remove the negative repayment markers from Mr M's credit file and instead show the DAS as in place with payments up to date, and to pay £150 compensation for the distress and inconvenience caused.

The Ombudsman's reasoning

The ombudsman found that while a DAS involves reduced payments rather than full contractual payments, the ICO guidance requires lenders to report arrangements accurately. When a customer makes payments in line with an agreed arrangement, those payments should not be reported as missed or in arrears. Reporting rolling missed payments when payments were made on time does not accurately reflect what happened and misleads other potential lenders. The ombudsman distinguished between: (1) payments made under the DAS on time, which should show the arrangement as up to date, and (2) actual missed payments under the DAS, which would justifiably be reported as missed. Since Mr M made all DAS payments on time, the negative repayment markers were inappropriate.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website