TSB Bank plc · DRN-6244609

The complaint Miss M complains that TSB Bank plc (‘TSB’) didn’t communicate fairly with her and registered a default on her credit file for a small unarranged overdraft. Miss M would like the default to be removed. What happened Miss M held a current account with TSB with an arranged overdraft limit of £350. Miss M exceeded her limit and fell into an unarranged overdraft in February 2025. Miss M’s account was subsequently closed, and a default was added to her credit file on 5 August 2025. Miss M complained that she’d contacted TSB in April 2025 to say her address was incorrect, and since then TSB hadn’t sent her post because they’d placed a ‘gone away’ marker on her account. Miss M said she’d not received correspondence about the default, and it was unfair. TSB didn’t uphold Miss M’s complaint. They said hadn’t sent Miss M letters after she advised her address was incorrect, because Miss M hadn’t updated her address. TSB thought Miss M was aware of the position on her account and they didn’t accept there had been an error in the closing of her account or the registration of a default. Miss M referred her complaint to the Financial Ombudsman Service. She didn’t think she’d been given proper notice of the default, and said it was affecting her ability to get credit. Our investigator considered TSB’s communication was reasonable in the circumstances. He thought a default was likely unavoidable. Unhappy, Miss M sought an ombudsman’s decision. My provisional findings I sent the parties my first provisional decision, saying: “I intend to uphold Miss M’s complaint in part. I’m minded to say TSB’s communication wasn’t fair, but I don’t propose to ask TSB to remove the default. Instead, I’m minded to say TSB should pay Miss M £100 for her distress and inconvenience. I’ll explain why. I’m aware Miss M doesn’t feel TSB have lent responsibly to her. I’m unable to investigate this as I can only consider the complaint that has already been made to the business, and which they’ve had a chance to answer. Miss M would need to make a new complaint to TSB about irresponsible lending before our service could consider this. I’m not minded to agree that TSB had to serve a default notice under the Consumer Credit Act 1974 here, because Miss M’s overdraft is repayable on demand. This means TSB can ask for it at any time. In those circumstances I’m not minded to agree a statutory default notice was required. On its website, the Information Commissioner’s Office (‘ICO’) explains that even where a default notice is required under the Consumer Credit Act 1974, lenders do not have a data protection obligation to issue one before reporting a default on a credit file. What matters is

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that the lender gives the customer notice of their intention to register a default. I’ve therefore considered how TSB communicated with Miss M about the unarranged overdraft and the possible default on her credit file. I’ve kept in mind that TSB are under a duty to comply with Principle 7 of the Financial Conduct Authority’s Handbook of rules and guidance. This requires firms to “pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading.” In February 2025 TSB wrote to Miss M about her unarranged overdraft. The letter said: “What happens when payments aren’t made? We’ll report the status of your account, any missed payments and/or exceeded credit limits to Credit Reference Agencies. The records stored by these Agencies are used by banks, building societies and other financial institutions when assessing your ability to manage your finances. This could affect your ability to obtain lending in the future and may also affect anyone you share a joint account with. This information will remain on a record for a period of six years. lf you don’t bring your account up to date it may result in TSB registering a default against your account…” Miss M contacted TSB in March 2025 about her unarranged overdraft, advising she was facing financial difficulty. TSB placed Miss M’s account on a short hold and sent her an income and expenditure form via email. TSB attempted to contact Miss M a few times in late March 2025 without success, and on 1 April 2025 they sent Miss M a letter saying, “lf you don’t repay the Unarranged Overdraft, we may require you to repay the total amount borrowed...” On 26 April 2025 Miss M contacted TSB to advise that part of her address was wrong. I’ve not seen any notes on Miss M’s account to suggest post was being returned to TSB as undelivered. I’ve put Miss M’s ‘incorrect’ address into the Royal Mail address checker, and it is registered as a valid address. Nevertheless, I’m not minded to say it was unreasonable for TSB to place a ‘gone away’ marker on Miss M’s account, given what she’d told them. This was to prevent post going to an incorrect address. TSB said Miss M would need to change her address online or in branch to receive future post. On 30 April 2025 a payment arrangement was agreed with Miss M. On 29 May 2025 a SMS was sent to Miss M reminding her to make a payment. Miss M didn’t pay, so TSB registered a default to her credit file in August 2025. It’s clear that TSB didn’t communicate further with Miss M before doing this. TSB say this is because Miss M didn’t update her address. However I’m not minded to agree that’s fair as TSB had previously used both email and SMS to communicate with Miss M. I’d expect them to use the channels open to them, particularly where they were aware of an issue with sending post, and they were likely to register a default to Miss M’s credit file. I am inclined to accept the lack of further communication was upsetting and disappointing for Miss M. I’m not minded to agree that further communication would have avoided a default being registered here. I say this because TSB had already notified Miss M of the amounts she needed to pay and that a default was possible. Even if Miss M didn’t receive her post, I’m inclined to say she was aware the payment plan she’d agreed on 30 April 2025 was to stop further action being taken on her account. And whilst I recognise that only small sums were required to bring the account in order, the payment plan wasn’t kept to, and the unarranged overdraft remained outstanding. Miss M’s

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last payments were 49p in January 2025 and £12 in July 2023. The Information Commissioner’s Office (ICO) sets out guiding principles for businesses reporting arrears, arrangements and defaults. This sets out that by the time an account is at least three months in arrears, and normally by the time an account is six months in arrears, it’s generally expected that a default will be registered. Taking into account the industry expectations here, and considering the brief holds on Miss M’s account for the payment plan, I’m inclined to say it was fair and reasonable for TSB to register the default when they did. I am sorry to disappoint Miss M, but I am not minded to ask TSB to remove the default in these circumstances as I’m inclined to say it is a fair and accurate reflection of what’s happened on her account. To put things right I’m minded to say TSB should pay £100 for Miss M’s distress and disappointment, as TSB didn’t communicate fairly with her about the action on her account between May 2025 and August 2025.” Neither party agreed with my findings, and I sent a second provisional decision, saying: “I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. I’ve taken into account any relevant law and regulations, the regulator’s rules, guidance and standards, codes of practice and (where appropriate) what is considered to have been good industry practice at the relevant time. Having reviewed the available evidence and submissions – and with my apologies to both parties – I’ve changed my provisional decision. On review, I now intend to say that TSB don’t need to take any action here. I’ll explain why. My view about the default being registered remains unchanged. I maintain that Miss M had enough information and a fair chance to avoid the default. TSB had told her in February 2025 that a default might be registered, and even if she didn’t get that letter, I’m minded to say she was aware of the status of her account. She later agreed a payment plan in April 2025, and TSB sent her a reminder text in May 2025. When Miss M didn’t make the May 2025 payment, the arrangement broke. TSB knew Miss M was in financial difficulty and that payments had been irregular. They also knew interest would continue to build. In those circumstances, I am minded to say it was reasonable for TSB to take steps to register the default when they did. I previously proposed compensation because, although I accepted they wouldn’t send letters, TSB didn’t send Miss M any further electronic updates about her account. TSB are under an obligation to consider Miss M’s information needs and communicate fairly with her, and I thought TSB could reasonably have continued to communicate with Miss M in other ways. But having reflected on this, I am minded to accept TSB’s explanation that they couldn’t send account-specific information over unsecure channels. Any messages would only likely have been general prompts for Miss M to get in touch—not warnings about the default. TSB sent Miss M a payment reminder in May 2025, and I’m minded to say that was reasonable in these circumstances to prompt Miss M to address her account. Even if I agreed that TSB should have done more, I’m not persuaded that extra prompts would have changed the outcome. Miss M didn’t respond to the May 2025 text or make the agreed payment, and her financial situation suggests she likely wouldn’t have been able to clear the overdraft even if more messages had been sent.

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I recognise Miss M’s unhappiness with what happened, and that she will likely be disappointed by my altered opinion. But having considered everything afresh, I’m inclined to say TSB have treated her fairly in the circumstances of her complaint. I don’t intend to ask TSB to take any action here.” Responses to my provisional findings TSB accepted my second provisional decision. Miss M said it was speculative to say she wouldn’t have acted if she’d received further communication. She said she was not seeking to challenge the default itself at this stage, but she’d like £100 compensation to reflect the poor service she received. 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. The nature of provisional decisions means they can sometimes change once further information is received and I am sorry that this has been disappointing for Miss M. I have considered Miss M’s additional submissions about compensation, but I’m afraid that this is not enough to persuade me to change the conclusions I reached in my second provisional decision. Having considered this matter carefully, I have decided not to uphold Miss M’s complaint. I don’t have the power to fine TSB; that’s the role of the Financial Conduct Authority as the regulator. I can only make an award of compensation if I find TSB treated Miss M unfairly and this caused her loss. I understand Miss M is disappointed by TSB’s service, but I’m not persuaded their communication was unfair in the circumstances of her complaint, for the reasons I set out in my second provisional decision. This means I won’t award compensation on this occasion. For the reasons I gave in both of my provisional decisions, I think the default was fairly reported by TSB, so I am not asking TSB to remove this. I acknowledge Miss M is no longer challenging the default. My final decision For the reasons I’ve set out, I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss M to accept or reject my decision before 21 April 2026. Clare Burgess-Cade Ombudsman

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