Not upheld: treatment during financial difficulty; communication of forbearance arrangement terms complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr A complained that HSBC unfairly defaulted his loan account despite agreeing to a Long Term No Affordability plan after he suffered serious ill-health and business closure in 2024, leaving him reliant on state benefits. Mr A misunderstood the LTNA plan, believing all account activity would be suspended, though HSBC had warned that normal collections activities would continue. After three months of accumulated arrears with no improvement in Mr A's situation, HSBC issued default notices in October and November 2025. The ombudsman found that while HSBC's communication about the plan could have been clearer, Mr A would have had no alternative but to accept it given his circumstances, and HSBC's decision to proceed with default after a reasonable forbearance period was fair and reasonable.

The Ombudsman's reasoning

While HSBC failed to clearly explain the LTNA plan terms, this communication failure did not cause Mr A to lose out because he would have had no alternative but to accept the plan given his financial circumstances and lack of other options. The regulator's guidance on forbearance requires lenders to provide a reasonable breathing space period, not indefinite debt suspension. After three months with no improvement and no contact from Mr A regarding his situation, HSBC's initiation of default procedures was reasonable and fair. The ombudsman found it unlikely that both default letters failed to reach Mr A at the correct address.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website