Partially upheld: premature default reporting complaint against STARTLINE MOTOR FINANCE LIMITED

Decision detail

Summary

Miss C complained that Startline Motor Finance Limited recorded a default on her credit file prematurely. She had voluntarily terminated a hire purchase agreement in July 2025 with an outstanding balance, and Startline told her she would have 30 days from 6 August 2025 to clear the balance before a default would be recorded. However, Startline recorded the default on 11 July 2025, before the promised period had elapsed. The ombudsman upheld the complaint in part, finding that while a default was appropriate in principle, recording it prematurely was unfair and inconsistent with Startline's representation. However, the ombudsman declined to amend the default date as the account would have defaulted anyway in early September 2025, and doing so would extend the period the default remained on her credit file. Instead, the ombudsman awarded £200 compensation for the distress and inconvenience caused by the premature recording, rejecting Miss C's request for higher compensation.

The Ombudsman's reasoning

While a default was appropriate in principle given the voluntary termination and outstanding balance, Startline acted unfairly by recording it prematurely on 11 July 2025 when they had explicitly told Miss C she would have until 6 August 2025 plus 30 days to clear the balance. Miss C was entitled to rely on this representation. However, since the account would have defaulted anyway in early September 2025, amending the default date would result in it remaining on her credit file longer, which would not be in her best interests. The ombudsman rejected Miss C's request for higher compensation, finding that while the error caused distress and inconvenience, the evidence did not show that longer-term or more severe impacts were solely or directly caused by the premature recording rather than the underlying financial difficulties.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website