Upheld: unfair treatment of vulnerable customer; mishandling of default process complaint against Clydesdale Bank Plc trading as Virgin Money

Decision detail

Summary

Ms C held a credit card account with Virgin Money and fell into arrears in early 2025. In June 2025, she disclosed a Complex PTSD diagnosis and provided an income and expenditure assessment showing no disposable income to meet repayments. Virgin applied an informal hardship arrangement but did not treat her as being in a formal Mental Health Crisis Breathing Space scheme. Ms C's account remained in arrears for several months, during which she received multiple distressing communications about default, before eventually being defaulted. The ombudsman upheld her complaint, finding that while Virgin was entitled not to apply the formal MHCBS scheme, they should have managed the inevitable default process more fairly by moving to default promptly with clear explanation to minimize distress to this vulnerable customer.

The Ombudsman's reasoning

While Virgin was entitled not to apply the formal MHCBS scheme without a formal application, they had a responsibility to treat Ms C fairly as a vulnerable customer once they identified her mental health difficulties and zero disposable income. Virgin should have clearly explained the implications of not being in MHCBS and provided signposting for formal application. Most critically, given Ms C's circumstances made default inevitable, Virgin should have moved to default the account promptly with clear explanation to minimize distress, rather than allowing it to remain in arrears for several months with continued warnings and communications. This prolonged uncertainty caused Ms C avoidable distress.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website