Upheld: breach of contract / irresponsible lending (Section 75 Consumer Credit Act 1974) complaint against Ikano Bank AB (publ)
Financial Ombudsman decision DRN-6393300 of 2026-06-04T00:00:00+00:00. breach of contract / irresponsible lending (Section 75 Consumer Credit Act 1974) complaint against Ikano Bank AB (publ). Outcome: Upheld.
Decision detail
| Reference | DRN-6393300 |
|---|---|
| Decision date | 2026-06-04T00:00:00+00:00 |
| Firm | Ikano Bank AB (publ) |
| Product | Personal loan |
| Claim type | breach of contract / irresponsible lending (Section 75 Consumer Credit Act 1974) |
| Outcome | Upheld |
| Remedy | Ikano Bank AB (publ) must: (1) cancel Miss S's loan agreement if still active and remove any adverse credit file information; (2) refund all repayments made under the loan agreement; (3) apply 8% simple interest per annum to refunds from date of each payment until settlement; (4) pay £500 compensation for physical distress and discomfort caused by the breach. Ikano must provide tax deduction certificate if required. |
Summary
Miss S purchased a kitchen for £10,826 financed by Ikano in July 2021. The installation suffered serious defects including electrical safety issues, damp problems, and design errors. After 6 months without a functioning kitchen and no clear completion timeline, Miss S terminated the contracts in February 2022. Ikano declined her Section 75 claim. The ombudsman found the supplier breached the Consumer Rights Act 2015 by failing to perform with reasonable care and skill, making Ikano equally liable. The ombudsman upheld the complaint, ordering full refund of loan payments with 8% interest and £500 compensation, finding that repeat performance had failed and a 100% price reduction was justified as Miss S never received a usable kitchen.
The Ombudsman's reasoning
The ombudsman found that K (through its sub-contractors) failed to carry out the installation with reasonable care and skill in breach of the Consumer Rights Act 2015. The serious defects included poor design, electrical safety hazards, and damp issues. Although some delays were attributable to third parties (damp remediation, worktop templating), the core failures were K's responsibility. By February 2022 (6 months in), Miss S had no functioning kitchen and no clear completion timeline. The subsequent 3-month silence from K until May 2022 was unacceptable. Miss S was entitled to terminate and claim a price reduction. The ombudsman rejected Ikano's argument that K had not been given opportunity to complete remedial work, finding the chronology showed persistent failures and lack of progress. Under the Consumer Rights Act, where repeat performance fails, a price reduction is appropriate. Given the kitchen never functioned and Miss S received no usable product, a 100% price reduction was justified.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Ikano Bank AB (publ), all decisions | 397 | 48% |
| Personal loan, all decisions | 22,070 | 30% |
Source
Read the original decision on the Financial Ombudsman Service website