Upheld: irresponsible administration of payment holiday and incorrect credit reporting complaint against Barclays Bank UK PLC

Decision detail

Summary

T, a limited company, complained that Barclays Bank UK PLC failed to correctly apply a 'Pay As You Grow' payment holiday to its Bounce Back Loan alongside an agreed short-term repayment plan from December 2023 to May 2024. This error caused arrears to be recorded on T's account when they should not have been, leading to the account being defaulted and reported to credit reference agencies. Although Barclays acknowledged the error in March 2025 and paid £500 compensation, they subsequently failed to properly correct the default on their internal systems, resulting in the default being reported again. The ombudsman upheld the complaint and ordered an additional £200 compensation for the inconvenience caused by the failure to properly correct the credit reporting, but rejected T's claims for wider commercial losses as not being solely and directly caused by Barclays' error.

The Ombudsman's reasoning

The ombudsman found that Barclays made two errors: first, failing to correctly apply the payment holiday alongside the short-term repayment plan, which caused arrears to be recorded when they shouldn't have been; and second, failing to properly implement the corrections to credit reference agency reporting after acknowledging the initial error. While the ombudsman accepted that T's credit profile may have been affected and could have impacted business activities, the evidence did not establish that the wider financial losses claimed were solely and directly caused by Barclays' error. The ombudsman noted that arrears existed before the payment holiday should have been applied, meaning T's credit score was already legitimately adversely affected. Commercial decisions are typically based on multiple factors, and the evidence did not demonstrate that Barclays' mistake was the determining cause of lost opportunities. Therefore, compensation was limited to inconvenience caused to T as a business entity.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website