Bank of Scotland plc trading as Halifax · DRN-6116584

The complaint Mr and Mrs M complain about the way Bank of Scotland plc trading as Halifax dealt with their mortgage account when they had financial difficulties. They say it misrepresented a reduced payment arrangement, didn’t take their vulnerabilities into account and unfairly reported adverse data to the credit reference agencies. Mr M has dealt with the complaint. He asks that Halifax removes adverse data from their credit files, formally acknowledges it failed to make reasonable adjustments or inform them about the impact of the payment arrangement, and pays compensation. What happened Mr and Mrs M have a repayment mortgage with Halifax, taken out in 2018. They had a fixed rate product due to expire at the end of April 2025. Mr M contacted Halifax in December 2024 and asked to switch the mortgage to interest only payments for six months under the terms of the Mortgage Charter. This reduced Mr and Mrs M’s monthly payments from about £2,000 to about £775. As the switch was under the terms of the Mortgage Charter it didn’t impact Mr and Mrs M’s credit files. In June 2025 Halifax wrote to Mr and Mrs M to say their monthly payments would be about £3,600 from July 2025. There were two reasons for the increase. The six-month interest only period would come to an end. And Mr and Mrs M’s fixed rate product had expired and the mortgage had gone onto Halifax’s standard variable rate. Mr M spoke to Halifax several times in June 2025, about what support it could offer. He told Halifax he’d been made redundant in 2024. The property was being marketed for sale. Halifax asked for information about Mr and Mrs M’s income and expenditure. The information Mr M provided showed their outgoings exceeded their income. Mr M said he wanted to avoid an arrangement that would affect his credit score and ability to borrow. At the end of June 2025 Mr M called Halifax and agreed a nil payments arrangement. Halifax reported the payment arrangement and mortgage arrears to the credit reference agencies in July 2025 and August 2025. Mr M says Halifax didn’t give him clear information during his calls as to how the arrangement would impact his credit file. He says he didn’t receive the letter Halifax sent confirming the arrangement. Mr and Mrs M cleared the arrears in September 2025, and took out a new interest rate product. Mr M says Halifax knew he had anxiety and mental health problems, and failed to take this into account and make reasonable adjustments such as sending information by email. Mr M says the adverse data prevented them re-mortgaging and, because of the nature of his work, prevented him getting a new job. Our investigator said Halifax had made Mr M aware that the arrangement would affect his credit file. He said the information that Halifax provided over the phone and in writing was clear, understandable, accessible, and timely, enabling Mr and Mrs M to make effective decisions. Our investigator said the evidence didn’t suggest there was a failure to make

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reasonable adjustments which impacted Mr and Mrs M’s decision to agree to the payment arrangement. Our investigator said the information reported by Halifax to the credit reference agencies was accurate. Mr and Mrs M didn’t agree and asked that an ombudsman reconsider the complaint. 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. Mr and Mrs M explained their complaint in detail, and referred to laws and regulations. Our role is to resolve disputes quickly and with minimal formality. Consistent with our informal approach, I won’t respond to everything Mr M has said in the same level of detail, and I’m not required to do so. What I must do is explain my reasons for reaching my decision about what’s fair and reasonable in the circumstances. I should also explain that where the evidence is incomplete or inconsistent I make my decision on the balance of probabilities – that is, what I think is more likely based on the available evidence. Halifax has to report accurate and up to date information to the credit reference agencies. Mr and Mrs M entered into a payment arrangement under which they made no payments for two months. They then made a payment to clear the arrears. Halifax recorded that the mortgage was in an arrangement for two months (July and August 2025) and that the account was up to date in September 2025. That information is accurate. Mr and Mrs M ask that the arrangement and/or arrears are removed from their credit files. They say Halifax didn’t tell them clearly how the arrangement would affect their credit files. They say they wouldn’t have entered into the nil payment arrangement if they’d known it would affect their credit files for six years. They said they might have borrowed from family to make partial payments, taken out short term finance, taken out a new interest rate product (despite having to pay the ERC when they sell the property), or sold assets such as jewellery or watches. I don’t know how realistic these options were. Given what Mr M told Halifax about their financial difficulties it’s not clear that they’d have been able to take out a loan or afford mortgage payments even with an interest rate product in place. When Mr M spoke to Halifax in June 2025 he expressed concern about entering into an arrangement as that might affect his credit file: it seems to me that they’d have looked for other options if any were available. But I’d only need to make a finding about this if I thought Halifax had failed to tell Mr and Mrs M that the nil payment arrangement would affect their credit files, and I don’t think that’s the case. Halifax had to provide Mr and Mrs M with the information they needed to make an effective, timely and well-informed decision. This needed to be presented in a way they could understand, taking into account any characteristics of vulnerability. What Halifax knew about Mr M’s mental health concerns and vulnerabilities Mr M says he disclosed on his very first call with Halifax his mental health concerns, that he struggled to understand complex financial terms, and became flustered under pressure and needed clear, simple explanations in a written follow up. They say Halifax failed to make a record of this and refused to provide written materials despite their requests and Mr M’s disclosed difficulties. They say it failed to make reasonable adjustments under the Equality Act 2010 or tailor communications as required by the Consumer Duty.

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Halifax says it has no record of Mr M disclosing a disability or a need for written information as a reasonable adjustment. We asked Mr M for some more information about his condition and how it affects him, and when he told Halifax about this. Mr M said he sought support from his previous employer’s assistance programme and a therapist, and was prescribed medication for anxiety and stress. Mr M said he didn’t tell Halifax he had a disability under the Equality Act. However, following his redundancy and loss of income he communicated that he was struggling mentally and finding the situation overwhelming. Mr M recalls asking for written confirmation on numerous occasions. He didn’t say when he communicated any of this to Halifax. Mr M says he struggled with financial terminology and the call handlers’ accents. He says while the statutory definition of a disability might not be met, they should have been treated as vulnerable customers due to their financial difficulties. I’ve taken what Mr M has told us into account when considering this complaint. Mr M’s phone calls with Halifax Mr M contacted Halifax in December 2024 and asked to switch the mortgage to interest only payments for six months under the terms of the Mortgage Charter. As the switch was under the terms of the Mortgage Charter it didn’t impact Mr and Mrs M’s credit files. This was only available for six months. Mr M contacted Halifax in April 2025. He was concerned they wouldn’t be able to afford the monthly payment when the interest only period ended. He said the property was being marketed for sale. Mr M called Halifax again in mid-June 2025. He was still concerned they wouldn’t be able to afford the monthly payment when the interest only period ended. Mr M told Halifax they were struggling as he’d been made redundant about nine months ago. He said there were possible buyers for the property. Mr M provided income and expenditure which suggested their monthly outgoings exceeded their income by more than £3,000. Halifax suggested a three-month nil payment arrangement. Mr M said he didn’t want this as it might impact his credit file. Mr M called again on 28 June 2025. Initially he said he wanted the nil payment arrangement. He then declined this after the script was read. He said he was worried about future borrowing if his credit file was impacted. Mr M said he was hoping to be in work within three months. There was a discussion about the difference between a nil payment arrangement and a payment holiday/deferral. Mr M said he’d call back. Mr M spoke to Halifax again on 30 June 2025. Mr M said he wanted to defer his mortgage payments for three months as he couldn’t afford to pay them. Mr M said he’d spoken to Halifax a number of times about his options, and this would be in his notes. The call handler checked the notes and said Halifax only allows deferred payments for two months. Halifax said this might not be the best option for Mr M, as he expected his circumstances to improve after three months. Mr M said the property was for sale and he needed short term help until the equity became available. Halifax said it could offer a reduced payment plan or zero payment plan for three months. It said the shortfall would be treated as arrears, and the credit file would be impacted. It said it was aware Mr M was concerned about his credit file. Mr M asked questions during the call about the difference between deferred payments and a

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zero payment plan. I don’t think that ought reasonably to have suggested to Halifax that he didn’t understand what was being discussed or – crucially – that he didn’t know that a zero or reduced payment arrangement would affect his credit file. There was a discussion about an assisted sale, which would mean recovery action would be held. Mr M opted for a nil payment plan, saying he needed it in place quickly. Halifax said not making payments would mean they’d fall behind. It said this was only a temporary concession and it could still take legal action for possession. It said with regard to the impact on the credit file, the longer they make reduced or nil payments for, the greater the impact on the credit score, and this will show for up six years. Halifax also said the credit file will show the plan, so not to worry. At the end of the call, Halifax told Mr M they’d receive a letter within a few days. Mr M said this was OK. Mr and Mrs M say that doesn’t mean he understood the impact of the arrangement. The call handler did have an accent and there were times when Mr M asked them to repeat information or checked he’d understood. Mr and Mrs M were in financial difficulties. And Mr M was suffering from anxiety and stress. But that doesn’t mean Halifax had fairly to assume Mr M was unable to understand the information he was given. There’s nothing untoward in Mr M asking for further information or checking he’d understood something. Having listened to the call, I don’t think Halifax knew (or ought reasonably to have known) if Mr M didn’t understand what was being discussed – in particular that entering into an arrangement might affect his credit file. Written confirmation of the payment arrangement and how it would affect Mr and Mrs M’s credit files Following the call, Halifax sent a letter to Mr and Mrs M to confirm the nil payment arrangement. The letter said it would need to let the credit reference agencies know when payments are missed or not paid in full. It said this will show on the credit file as missed payments, including those covered by the nil payment plan. I’m sorry if this letter wasn’t safely received by Mr and Mrs M, but there’s nothing to suggest this was due to an error by Halifax. Halifax told Mr M during the call on 30 June 2025 that they’d receive a letter within a few days. Mr and Mrs M could have contacted Halifax if they didn’t receive the letter. Did Halifax give Mr and Mrs M the information they needed to make an effective, timely and well-informed decision? Mr M says he was confused by the financial terminology used in the mortgage charter and by Halifax, and the differences between a payment arrangement and a payment deferral. However, what’s at issue here is whether Halifax told Mr M that entering into the nil payment arrangement would affect his credit file. Halifax told Mr M more than once during the call on 30 June 2025 that the arrangement would affect his credit file, and that this would be for six years. The letter it sent after the call said the arrangement would show on the credit file as missed payments. Mr M had been told on previous calls that the nil payment arrangement would affect his credit file. Mr and Mrs M say it not enough for Halifax to rely on reading out scripted information and sending a confirmation letter. Just because information is scripted doesn’t mean it isn’t clear: the purpose of the script is to ensure relevant information is given to customers. As I said, I

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don’t think Halifax ought reasonably to have known if Mr M didn’t understand the information he was given, that entering into a nil payment arrangement would affect his credit file. In response to a Data Subject Access Request, Mr M saw an internal note of a call in September 2025 where Halifax said “having a repayment plan in place if arrears are not paid in full will have a positive impact on credit file as it will provide information to agencies that active plan is in place”. I don’t think that’s incorrect or misleading. What impacts the credit file is missed payments and arrears. An agreed plan is positive as compared to payments being missed and the mortgage being in arrears without an arrangement in place. Mrs M’s consent to the nil payment arrangement Mr and Mrs M say it was unfair for Halifax to agree an arrangement that would impact both borrowers without asking Mrs M for informed consent. I don’t think Halifax had any reason to think it needed to speak to Mrs M separately – for instance that there was a marital dispute. I don’t think Halifax had fairly to insist on speaking to Mrs M before offering the payment arrangement. Especially as Mr M said he needed it in place quickly. If Mrs M didn’t agree with the payment arrangement and she was able to make the mortgage payments that were due, there was nothing to prevent her doing so. Further points made by Mr and Mrs M Following our investigators view, Mr and Mrs M sent a document headed Expanded Ombudsman Core Issues Summary, to assist me in reviewing their complaint. They list six factors which they say together show uncertainty and misunderstanding by Mr M. I can’t fairly agree with their interpretation of events. For instance, Mr and Mrs M say Mr M’s multiple calls to Halifax over a short period suggests he was confused. They also point to his reluctance to agree the nil payment arrangement and his concern about future borrowing and his creditworthiness. I think this could suggest the opposite: that Mr M knew the payment arrangement would affect his credit file and was reluctant to agree to it for exactly that reason. I don’t think it changes things that Mr M asked for clarification of some matters during calls, that call handlers referred some queries internally, or that Mr M didn’t initially know the difference between a payment arrangement and a payment deferral. What matters here is that Halifax took reasonable steps to ensure Mr and Mrs M were aware that agreeing a nil payment arrangement would affect their credit files. I think the fact that Mr M expressed concern during several calls about the impact of an arrangement on future borrowing and creditworthiness suggests he did understand it might impact his credit file. And Halifax sent a letter to Mr and Mrs M confirming the arrangement and that it would be reported on their credit files. I think Halifax took sufficient steps to ensure Mr and Mrs M understood the nil payment arrangement would be reported to the credit reference agencies. What is the impact of the adverse data? I don’t think Halifax made an error when it reported that the mortgage was in an arrangement. But, for completeness, I’ll comment on what Mr and Mrs M have said about the impact this had.

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Mr and Mrs M say an application for a residential mortgage was declined following a credit assessment. They say the broker confirmed this was due to the adverse markers recorded by Halifax (they didn’t provide evidence to support this). Mr and Mrs M say they’ve recently been unable to secure a competitive product for one of their buy to let mortgages. And Mr M has been declined other financial products. It’s likely that having mortgage arrears on their credit file will affect Mr and Mrs M’s applications for credit. But I’m not persuaded by the available evidence that this is the only reason Mr and Mrs M had difficulty obtaining a new mortgage or other credit. Mr M was out of work. Mr and Mrs M were in financial difficulties, with their outgoings exceeding their income by about £3,000. It seems unlikely they’d meet a lender’s affordability checks. Without clear evidence to demonstrate otherwise, I can’t discount the possibility that there are other factors – such as high credit commitments or other adverse markers – that affected Mr and Mrs M’s credit scores and how their applications were viewed by other lenders. Mr M says the adverse markers recorded by Halifax prevented him obtaining employment. By mid-2025 Mr M had been out of work for about a year. I can’t fairly find that the difficulty he had finding work was solely due to the payment arrangement recorded for July and August 2025. I’m sorry for the difficult situation Mr and Mrs M are in. But I think Halifax took sufficient steps to ensure Mr and Mrs M understood the nil payment arrangement would affect their credit files. The information Halifax reported to the credit reference agencies is accurate. I don’t think it’s fair and reasonable in the circumstances to require Halifax to remove the arrangement or arrears from Mr and Mrs M’s credit files, or take further steps regarding this complaint. My final decision My decision is that I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr M and Mrs M to accept or reject my decision before 1 April 2026. Ruth Stevenson Ombudsman

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