Not upheld: Account administration errors complaint against National Westminster Bank Public Limited Company (NatWest)

Decision detail

Summary

Mrs M complained about interest applied to her loan by NatWest following a three-month Covid-19 payment break in May-July 2020. Mrs M requested that the missed payments be added to her balance and the loan term be extended, and NatWest issued the relevant paperwork. However, Mrs M did not return the completed paperwork despite multiple requests from NatWest over several years. The loan term ended in October 2025 with an outstanding balance of £3,409.23, and NatWest continued to apply interest. The ombudsman found that NatWest correctly applied interest under the loan terms and conditions, and that NatWest had clearly explained what Mrs M needed to do to extend the loan term on multiple occasions. The complaint was not upheld, and Mrs M was recommended to contact NatWest's Collections team to discuss an affordable repayment plan.

The Ombudsman's reasoning

The ombudsman found that the loan terms and conditions clearly stated that interest is calculated daily on the outstanding balance. The payment break increased the outstanding balance, which in turn increased the interest applied. NatWest issued regular correspondence with multiple requests for Mrs M to complete the term extension paperwork, which was the normal approach to capitalise arrears and extend the loan term. Mrs M failed to return the completed paperwork despite being contacted regularly and having opportunities to discuss the matter with NatWest. Without the completed extension request, NatWest was unable to add the arrears to the loan or extend the term. Once the loan term ended without repayment, NatWest was entitled to continue applying interest to the outstanding balance.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website