Not upheld: arrears notice procedure and account management complaint against Barclays Bank UK Plc trading as Tesco Bank

Decision detail

Summary

Mr C complained that Tesco Bank sent him a Notice of Sums in Arrears (NOSIA) despite having a direct debit set up for payments. The issue arose because refunds on his credit card cleared the balance, preventing the direct debit from being collected for two months. Tesco explained that their system correctly identified missed minimum payments, as refunds do not count towards the minimum payment obligation under Mr C's terms and conditions. The ombudsman upheld Tesco's position, finding the NOSIA was correctly triggered under the Consumer Credit Act 1974, and that the £25 goodwill payment already provided was fair compensation for the concern caused by the unusual circumstances.

The Ombudsman's reasoning

The ombudsman found that Tesco was required to send a NOSIA under the Consumer Credit Act 1974 when their system identified two missed payments. Although Mr C's account balance had been cleared by refunds, his terms and conditions obligated him to make minimum payments each month, and refunds do not count towards this obligation. Therefore, there were genuine arrears despite the unusual circumstances. The ombudsman acknowledged Mr C's concerns about the system's logic but confirmed that Tesco's system operated correctly and that the £25 goodwill payment was fair compensation for the worry caused.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website