Not upheld: communication and handling of default notice; complaint about letter contents and lack of callback complaint against Premium Credit Limited

Decision detail

Summary

Mr S complained about how PCL communicated regarding his running account credit agreement for home insurance after his direct debit was cancelled. PCL sent a default notice letter warning of serious consequences including potential credit file damage, but subsequently clarified Mr S could ignore it once the insurance policy was cancelled. Mr S, who has a medical condition, found the letter distressing and complained about the lack of a manager callback and unclear credit file implications. The ombudsman found PCL acted reasonably in sending the notice given it did not know the policy was cancelled, appropriately communicated consequences, and promptly clarified the situation when contacted. The complaint was not upheld, with the £20 voucher already provided deemed sufficient compensation.

The Ombudsman's reasoning

The ombudsman found that PCL was entitled to send the default notice letter because the direct debit cancellation constituted a breach of the agreement terms, and PCL did not know the insurance policy had been cancelled at that time. The letter appropriately set out the consequences of non-action to protect Mr S's interests. PCL was not required to include speculative wording about cancelled insurance policies as there were multiple possible reasons for the direct debit cancellation. Once Mr S contacted PCL, it promptly explained he could ignore the letter. PCL's attempt to call followed by email communication was reasonable given the circumstances. No credit file damage occurred. The £20 voucher already provided was adequate compensation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website