Not upheld: Mortgage administration / arrears handling complaint against Lloyds Bank Plc

Decision detail

Summary

K, a limited company, complained to the FOS about Lloyds Bank's handling of a £175,000 CBILS loan, specifically its refusal to extend the loan term from six to ten years. The complaint involved two separate requests: one in 2023 and one in 2025. The ombudsman found that the 2023 complaint was outside its jurisdiction because it was referred more than six months after Lloyds' final response. Regarding the 2025 complaint, the ombudsman found that Lloyds acted fairly in refusing the term extension because it did not have sufficient financial information from K to assess whether the company was experiencing financial difficulty, as Mr E had not provided the requested draft accounts, financial projections, and personal financials. The ombudsman rejected various other allegations including claims about 'phantom overdrafts' and data protection breaches, and did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman found that Lloyds acted fairly in refusing to extend the loan term in 2025 because it did not have sufficient financial information to assess whether K was experiencing financial difficulty. Although Lloyds had requested draft accounts, financial projections, and personal financials from directors and shareholders, Mr E did not provide this information. The ombudsman considered it reasonable for Lloyds to require updated information in 2025 regardless of any information provided in earlier years, particularly given the strained relationship between the parties. The ombudsman rejected the argument that Lloyds should have offered forbearance without adequate evidence of financial difficulty, and found that the overdraft was not a 'phantom' overdraft but an actual overdraft created when Lloyds took CBILS payments from the current account.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website