Not upheld: default reporting to credit reference agencies complaint against UK Insurance Limited trading as Churchill

Decision detail

Summary

Mrs C complained that UKI incorrectly added a default to her credit file in August 2025 relating to a fixed sum loan used to finance car insurance. After Mrs C cancelled her insurance policy, a direct debit payment of £50.07 failed on 25 April 2025, leaving an outstanding balance of £61.20. Mrs C claimed she was unaware of the outstanding payment and had not received communications about it, and argued that UKI should have issued a default notice before reporting the default. The ombudsman found that the direct debit failure was not due to UKI error, that UKI had contacted Mrs C via email and text message about the outstanding balance, and that no default notice was required under the Consumer Credit Act 1974 before reporting to credit reference agencies. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while the direct debit failed, there was insufficient evidence that this was due to UKI error. The ombudsman was satisfied that UKI contacted Mrs C on multiple occasions via email and text messages to inform her of the outstanding balance. The ombudsman clarified that under section 87 of the Consumer Credit Act 1974, a default notice is not required before reporting a default to credit reference agencies. Since Mrs C failed to pay the outstanding balance and UKI only added the default several months later, the ombudsman found it reasonable for UKI to record the default.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website