DRN-3519352
The complaint
Mr Q complains that Bank of Scotland plc trading as Halifax unfairly registered a default on
his credit file.
What happened
Mr Q had a Halifax credit card. Mr Q lost his job due to the pandemic and he was unable to
make payments to his credit card account. When Mr Q was able to go back to work, he says
he saved up and he managed to pay the outstanding credit card balance. He later checked
his credit file, only to find out that Halifax had registered a default. Mr Q made a complaint to
Halifax.
Halifax did not uphold the complaint. They said that they sent Mr Q a default notice on 26
October 2020, which advised him of his intention to register a default on his credit file if they
didn’t receive a payment to bring his account up to date. Halifax also said that they sent him
a final arrears letter on 27 November 2020. They said as they didn’t receive a response from
Mr Q, the account was closed. Halifax said that they are legally required to report accurate
information to credit reference agencies, so as his default had been applied correctly, they
were unable to remove this for him.
Mr Q brought his complaint to our service. He said that he did not receive these letters from
Halifax. Our investigator did not uphold Mr Q’s complaint. He said that the last payment that
Mr Q made to his card was in July 2020 and he made no further payments to the account
prior to the account defaulting in March 2021. Our investigator said that Mr Q should have
contacted Halifax to let them know of the difficulty he was in, but as Mr Q did not do this,
Halifax had done nothing wrong in taking the action that they did.
Our investigator said that Halifax sent Mr Q arrears notices when he first started missing
payments on his accounts. He said that when Mr Q was three months in arrears, Halifax
enclosed a default notice which told Mr Q that they would place a default on his credit file if
he didn’t contact them to make an arrangement or make the repayment. Our investigator
said that Mr Q did not make any contact with Halifax until 15 February 2021, when he
completed his income and expenditure details, but this revealed Mr Q had no income and so
no plan could be set up for him. As Mr Q told Halifax that he was to receive income shortly,
they agreed a one month hold on the account, but as Mr Q did not contact them or make any
further payments, Halifax defaulted the account on 25 March 2021.
Mr Q asked for an Ombudsman to review his complaint. He said Halifax did not send him
any post to his house during lockdown and when lockdown ended he contacted Halifax
straight away. He said he wanted to buy a house but the default would stay on his credit file
for six years.
What I’ve decided – and why
I’ve considered all the available evidence and arguments to decide what’s fair and
reasonable in the circumstances of this complaint.
A default can only be registered when a customer has been in arrears for at least three
months. A notice of default was issued to Mr Q on 24 October 2020, as it had been three
months since Halifax received a payment from him. I know Mr Q says that he did not receive
the letters Halifax sent him, but the address on the letters match up to what Mr Q told us his
address is, so I’m satisfied that Halifax did send these letters. And I wouldn’t be able to hold
Halifax responsible for any issues with the postal system as this would be outside of their
control.
This letter was followed up by another letter which Halifax also sent to Mr Q. From this
information, I can see that the letter was dated 27 November 2020. This letter was
addressed to Mr Q’s registered address also and told him it was not too late for them to help
him with his account. Halifax then sent Mr Q another letter on 30 December 2020 which said
they would be ending his agreement soon and they could still help him. This letter was also
addressed to his registered address.
Mr Q did contact Halifax on 15 February 2021. This was before his account actually
defaulted. But the system notes of the call show that Mr Q was not working and he was not
getting any income at all. So I’m not persuaded that Mr Q could have avoided the default,
even if he would have received the letters that Halifax had sent him as he had no income to
make an arrangement with them.
I’ve considered that Mr Q told Halifax on this call, that he was hopeful that he could return to
work at the end of March and that he would be busy, so Halifax had put in place a one
month zero payment temporary plan to start on 15 February 2021. But Halifax’s notes show
that Mr Q did not contact them before the plan had expired so they defaulted the account on
25 March 2021.
I’m satisfied that Halifax were fair to do this here as they could have defaulted the account
earlier (from three months in arrears) but the account was eight months in arrears when they
did do this. Mr Q’s financial circumstances did not appear to have improved in this time
period as evidenced by the lack of payments made to the account and him telling Halifax he
had no income a month prior to the account defaulting.
Mr Q rang Halifax on 29 March. He wanted to set up a plan on his account and he said that
he would call back to make payments of £25 a month, but the notes state that the call
handler had told Mr Q that the account had defaulted. And I can see that he did ring up the
following month and tell Halifax that he wanted to make a payment, but Halifax informed him
they had passed the debt to a third party debt collection company.
It's clear to me what a difficult time Mr Q has been through and is going through here. He’s
clearly trying to be proactive in dealing with his finances at a very tough time. Mr Q says that
he has saved up and paid off the balance of the credit card now. So although I won’t be
asking Halifax to remove the default, if Mr Q has paid off the full outstanding balance, the
default should now be marked as satisfied on his credit report. If this is not marked as
satisfied, then Mr Q may wish to get in touch with the credit reference agencies and/or the
third party debt collection agency to amend his credit file to reflect this.
In addition, Mr Q may wish to consider registering a “notice of correction” with the credit
reference agencies to explain what happened during the timeframe in question. This is a
short explanatory note that he can add to an entry on his credit file, to explain the
background to that entry. So anyone who searches his credit report, such as a mortgage
lender, would see the notice of correction and take the notice into account if they viewed his
credit file. Mr Q would need to contact the CRA’s to do this.
In summary, in order to ask Halifax to remove the default, I would need to see that they had
registered the default incorrectly. But as the account was in arrears for several months and
they had sent letters to Mr Q’s registered address with the implications of this and what
would happen, including notices of defaults, then I’m satisfied that Halifax acted in the
circumstances as I would expect them to, especially when Mr Q had no income to make an
arrangement with them before the account defaulted. I understand this decision may have
an impact on Mr Q getting a mortgage in the future, so I haven’t made this decision lightly,
and I commend him on the actions he took in paying this debt off when he was back to work,
but it follows I don’t require Halifax to do anything further.
My final decision
I do not uphold this complaint.
Under the rules of the Financial Ombudsman Service, I’m required to ask Mr Q to accept or
reject my decision before 31 October 2022.
Gregory Sloanes
Ombudsman
