Upheld: account closure administration error and credit file damage complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr B complained that HSBC closed his credit card account and the impact on his credit file. Although HSBC provided the required two months' notice and had commercial discretion to close the account, they failed to actually close it when stated, resulting in an annual fee, late payment fees, and adverse credit file markers being applied to an account with a nil balance. HSBC acknowledged the error and agreed to refund the fees and amend the credit file, but Mr B remained dissatisfied. The ombudsman upheld the complaint, finding HSBC's initial remedial steps reasonable but ordering additional compensation of £100 plus 8% simple interest on the £350 Mr B paid to clear the account, to reflect the inconvenience and distress caused by the administrative failure.

The Ombudsman's reasoning

HSBC had broad commercial discretion to close the account and provided the required two months' notice in line with the credit agreement terms, making the closure decision reasonable. However, HSBC's failure to actually close the account when stated, despite a nil balance, was an acknowledged error that resulted in unnecessary charges and credit file damage. While HSBC's refund of fees and credit file amendment were reasonable remedial steps, additional compensation was warranted for the inconvenience and distress caused. The impact on Mr B's limited company could not be considered as it is a separate legal entity from Mr B personally.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website