Upheld: irresponsible account management, unfair account restrictions, incorrect credit reporting, unfair interest charges complaint against Clydesdale Bank Plc trading as Virgin Money

Decision detail

Summary

Mr M complained about Virgin Money's management of his credit card account after a direct debit incorrectly took his full balance in October 2025 instead of the minimum payment. When Mr M reversed this payment on Virgin Money's advice, the bank failed to warn him that he would still need to make a minimum payment to avoid a missed payment marker. Virgin Money then incorrectly refunded £2,131.02 to Mr M's account, inflating his balance and causing interest charges. The account was subsequently restricted and a missed payment marker was applied to his credit file. The ombudsman upheld the complaint, finding Virgin Money's errors caused Mr M distress and inconvenience, and ordered compensation of £200 total and removal of the missed payment marker from his credit file.

The Ombudsman's reasoning

The ombudsman found that Virgin Money made a critical error when a direct debit took the full balance instead of the minimum payment in October 2025. Without evidence to the contrary, it was reasonable to conclude Mr M did not intend this payment. All subsequent issues—account restriction, missed payment marker, and inflated balance with interest charges—stemmed from this initial error and Virgin Money's inadequate handling of the reversal. While Virgin Money could generally restrict accounts, doing so in these circumstances was unfair because it resulted from Virgin Money's own error. The ombudsman found Virgin Money should have explicitly warned Mr M that reversing the payment would still result in a missed payment if he did not make the minimum payment that day. The interest charged on money transfers was unfair as it resulted directly from Virgin Money's erroneous refund. Although the promotional rate extension claim could not be verified, the ombudsman did not extend it further as this would not align with account terms. The £100 compensation already paid was insufficient and should not have been applied to the credit card balance without Mr M's consent.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website