Not upheld: Account closure without notice complaint against Hastings Insurance Services Limited trading as Hastings Direct

Decision detail

Summary

Mr M complained that Hastings Direct improperly terminated his running account credit agreement and cancelled his car insurance policy after he cancelled his direct debit instruction due to bank problems. Although Mr M made a manual payment for the amount due, the credit agreement terms required him to maintain an active direct debit instruction. HD sent multiple letters and text messages warning of termination if the direct debit was not reinstated and offering alternatives such as paying the outstanding balance in a lump sum. Mr M did not comply, and HD terminated the agreement and cancelled the insurance policy in November 2025. The ombudsman found that HD acted properly within the contractual terms and provided adequate notice and options before termination, so the complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that the terms and conditions of the credit agreement clearly required Mr M to make repayments by direct debit and maintain an active direct debit instruction. Mr M breached these terms by cancelling his direct debit and not reinstating it. Although Mr M was up to date on payments, he was still in breach of the contractual terms. HD properly communicated the breach, the consequences, and provided options for rectification. The ombudsman considered relevant legislation (Consumer Credit Act 1974, Consumer Rights Act 2015) but found this did not change the fact that Mr M had agreed to the direct debit requirement as a condition of borrowing. HD gave Mr M adequate notice and time to rectify the situation before termination.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website