Upheld: Account closure without notice complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr A complained that HSBC treated him unfairly following the closure of his current account in January 2025, which left an outstanding overdraft balance. HSBC failed to default the account until July 2025 when it should have done so in February 2025, resulting in multiple distressing collection calls, missed payment markers on his credit file, and failure to notify him of the default at his updated address. Although Mr A was unemployed and unable to repay the balance, HSBC's delay caused unnecessary distress and inconvenience. The ombudsman upheld the complaint, requiring HSBC to backdate the default to February 2025, remove missed payment markers, and pay £250 compensation.

The Ombudsman's reasoning

The ombudsman found that while HSBC should have defaulted the account in February 2025 rather than July 2025, Mr A would not have been able to avoid default given his unemployment from January 2025 and arrears on priority bills. However, HSBC's delay in taking action caused unnecessary distress and inconvenience through multiple calls and failure to communicate the outstanding balance. The ombudsman rejected Mr A's argument that he could not pay due to lack of online access, finding he could have contacted HSBC directly. Regarding the address issue, while HSBC could have done more to capture the address change when Mr A mentioned moving house, Mr A bore responsibility for not ensuring his address was updated despite being aware it was out of date. The £100 compensation offered was insufficient; £250 was appropriate to recognise the distress and inconvenience caused by HSBC's errors.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website