Not upheld: Account closure without notice complaint against Monzo Bank Limited

Decision detail

Summary

Mr Y complained that Monzo unfairly defaulted him and closed his account after he went into an unarranged overdraft of £130 following a reversed chargeback credit. The overdraft arose when Monzo reversed a temporary £130 credit after the supplier's bank defended a chargeback claim with photographic evidence. After warning Mr Y on 15 January 2025 to fund his account, Monzo issued a default notice on 7 March 2025 giving him 30 days to repay or agree a repayment plan. When Mr Y failed to do so, Monzo defaulted his account and closed it on 7 April 2025. The ombudsman found that Monzo acted fairly because Mr Y owed a legitimate debt, Monzo provided clear communications about repayment obligations and consequences, and Monzo followed their terms and conditions in issuing the default and closure.

The Ombudsman's reasoning

The ombudsman found that although the overdraft arose from a reversed temporary credit rather than a deliberate borrowing agreement, Mr Y still owed a legitimate debt to Monzo. Monzo provided clear communications about the debt amount, repayment deadline, and consequences of non-payment through multiple text messages and emails. The ombudsman was satisfied that Monzo followed their terms and conditions in issuing the default notice and closing the account after 60+ days of unarranged overdraft. The fact that Mr Y was disputing the chargeback decision did not remove his liability for the debt or justify non-repayment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website