Not upheld: Account administration errors complaint against Lloyds Bank PLC

Decision detail

Summary

Mr H, a sole trader who had set up a limited company H in 2018, applied for a £20,000 Bounce Back Loan in 2020 under a trading name used by both entities. Lloyds issued the loan in Mr H's sole trader name and paid the proceeds into his sole trader account. When H went into voluntary liquidation in 2024, the liquidators contacted Lloyds about the BBL liability, but Lloyds maintained it was Mr H's personal debt. Mr H complained that the loan should have been in H's name, but the ombudsman found that Lloyds had no way of knowing this intention, as the application contained only sole trader details with no mention of the company's registered name or number, and Mr H never requested correction despite knowing he lacked an account in H's name at the time of application.

The Ombudsman's reasoning

The ombudsman found that BBLs were designed for rapid deployment during the COVID-19 pandemic and were available to sole traders, partnerships, and limited companies. The bank could not have known that Mr H intended the loan for the limited company H, as the application used a trading name applicable to both entities, the sole trader field was completed, and H's registered details were absent. The proceeds being paid into the sole trader account was consistent with the application. Even if Mr H had difficulties opening an account for H, this did not make the bank's decision to issue the loan in his sole trader name a fault. Mr H was aware he did not have an account in H's name when applying and made no attempt to provide H's details. Additionally, Mr H never requested a novation (transfer) of the loan after it was granted, despite knowing he was no longer trading as a sole trader.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website