Upheld: service failure and errors in loan application processing complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr K applied for a personal loan from HSBC on 4 October 2025 but encountered multiple service failures including unclear documentation requests, failure to respond to inquiries, and system errors preventing proper processing of a second application. Over several weeks, Mr K made multiple contact attempts and branch visits without resolution. HSBC offered £150 compensation, but the ombudsman upheld the complaint, finding that the first two applications should be removed from Mr K's credit file and compensation should be increased to £300 to adequately reflect the distress and inconvenience caused by the bank's errors.

The Ombudsman's reasoning

While HSBC was not obligated to approve the loan as the first application was incomplete, the bank's service failures in communicating requirements, responding to inquiries, and managing multiple applications were clear errors. The applications in October and November did not reach proper conclusions due to HSBC's errors, so they should not appear on Mr K's credit file. Only the third application, which reached a final decision, should be recorded. The distress and inconvenience caused by weeks of errors requiring multiple calls and branch visits warrants compensation of £300 rather than the £150 initially offered.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website