Partially upheld: mishandling of loan during financial difficulty, alleged miscommunication of repayment arrangements, unfair recovery action complaint against Barclays Bank UK PLC

Decision detail

Summary

S, a limited company, complained that Barclays mishandled its £40,000 Bounce Back Loan by failing to provide adequate support during financial difficulty, miscommunicating how repayment arrangements would affect arrears, and unfairly escalating recovery action including issuing a formal demand. S had used multiple 'Pay As You Grow' options and agreed to two short-term repayment plans at reduced rates from June 2023 onwards, but continued to experience financial difficulty with arrears accumulating. Barclays issued a formal demand in February 2025, shortly before Mr R suffered a heart attack. The ombudsman found that Barclays had adequately explained that arrears would accrue under the plans through written documentation and call recordings, and that the formal demand was reasonable given the prolonged arrears period and prior forbearance. The complaint was partially upheld only for acknowledged service failings (missed call backs), with the £200 compensation already offered by Barclays deemed fair and reasonable.

The Ombudsman's reasoning

The ombudsman found that Barclays adequately explained the repayment plans and their consequences, including that arrears would accrue. The written plan documentation clearly stated this, and call recordings confirmed sufficient explanation. A reasonable business customer would have understood that reduced payments would not maintain the loan in accordance with original terms. The ombudsman concluded that even if Mr R had understood arrears would accrue, S could not have afforded contractual payments anyway, so arrears would have accumulated regardless. Barclays provided adequate information about the account and did not advise closing the business. The formal demand was reasonable given the prolonged arrears period and prior forbearance measures. Once informed of Mr R's health condition, Barclays appropriately referred the matter to specialist support. The only acknowledged shortcomings were missed call backs and service issues, which Barclays had already offered £200 compensation to address.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website