Partially upheld: default registration, misinformation about payment plan, poor customer service to vulnerable customer complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr S complained that HSBC reported a default to his credit file despite allegedly agreeing to a payment plan on 30 August 2025. HSBC closed his account in February 2025 and demanded repayment of his overdraft, ultimately registering a default in September 2025. During a two-hour call on 30 August 2025, Mr S requested a payment plan, stating he had no income and was receiving family financial support, though he actually had £6,000 in a separate account. HSBC incorrectly agreed to a payment plan which was never set up, and subsequently registered the default. The ombudsman found the default registration was fair based on the information HSBC had at the time, but upheld the complaint regarding distress caused by misinformation and poor handling of Mr S's disclosed vulnerability, awarding £300 compensation while refusing to remove the default from his credit file.

The Ombudsman's reasoning

The ombudsman found that HSBC clearly and correctly informed Mr S multiple times during the call that he needed to pay the full arrears by 5 September 2025 to avoid a default, but Mr S did not indicate he would pay in full. Based on the call recording and Mr S's statements during the call about having no income and being unable to pay in full despite the importance of avoiding default, the ombudsman concluded HSBC had a reasonable basis to believe Mr S could not have avoided the default even with correct information at the end of the call. However, the ombudsman found HSBC failed to adjust their approach when Mr S disclosed vulnerability and that the call was affecting his mental health, and that poor communication and multiple lengthy holds caused avoidable distress.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website