Lloyds Bank PLC · DRN-5762418

The complaint A company, which I’ll refer to as R, complains that Lloyds Bank PLC unfairly defaulted its Bounce Back Loan due to missed payments. R’s director says that the payments were only missed due to the bank’s decision to close R’s business account, as well as delays in setting up a Loan Servicing Account. What happened R received a £30,000 Bounce Back Loan in 2020. In late 2023, Lloyds gave notice to R that it intended to close its business account in two months. The closure of R’s account went ahead in February 2024. In early 2024 R complained to Lloyds about the closure of its account. R then referred its complaint to our service and accepted a resolution to that complaint. R also made a separate complaint to Lloyds’ delays in setting up a loan servicing account, which is used to service the Bounce Back Loan. In October 2024 Lloyds defaulted R’s Bounce Back Loan and passed it to its recoveries department. The bank also assigned a third-party debt collection agency to administer the debt on its behalf. R complained about this to Lloyds. Lloyds didn’t think it had treated R unfairly because R had missed several payments towards the Bounce Back Loan and never made these up. Lloyds also said it had sent several letters to R warning it about these missed payments. Lloyds did acknowledge R had said it had previous issues with receiving post but the bank said it wasn’t responsible for this. R referred its complaint to our service. One of our investigators looked into the complaint but didn’t think it should be upheld. She gave the following reasons, in summary: • She acknowledged the director’s comments about the bank’s failure to give notice to R that its account would be closed. But she wouldn’t go over that point again as it was already considered in the previous complaint brought to us by R. • She also couldn’t consider a complaint about Lloyds’ delays in setting up the Loan Servicing Account for R because Lloyds had issued its final response to that complaint in June 2024 and R hadn’t referred it to us within the six-month time limit • She could consider a complaint about Lloyds’ actions in defaulting the Bounce Back Loan. However, she thought it was reasonable for Lloyds to default the loan due to the missed payments. • She recognised R was complaining to Lloyds around the time of these missed payments but she didn’t agree that this meant R didn’t have to make the payments due under the loan contract. Furthermore, she thought R ought to have been reasonably aware of the arrears that had built up over the months but R had chosen not to address these.

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• She also addressed a point R had made about Lloyds failing to offer a repayment plan by saying she’d seen that Lloyds had told R to get in touch with the bank to discuss repayment options. She said it was up to R to do this. R didn’t accept our investigator’s opinion. Its director made the following points in response: • R’s business account had been closed without proper notice. Had Lloyds given notice R would have made alternative arrangements and not missed any payments. • R only had access to the new Loan Servicing Account from around February 2024 • It was therefore not reasonable to conclude that R was primarily responsible for the missed payments on the Bounce Back Loan. The complaint has now been passed to me to decide. 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. Having done so, I agree with our what our investigator said, for broadly similar reasons. I will make some further comments though. I recognise R’s director attributes the missed payments to a failure by Lloyds to provide notice of its intention to close R’s bank account, as well as to delays setting up a loan servicing account. Our investigator was right to say that these specific events were subject to separate complaints and that the Financial Ombudsman Service cannot consider those issues. However, whilst I’ve noted R’s director’s belief that this issue cannot be considered in isolation, I think I can reach a fair outcome for this complaint about Lloyds’ decision to default R’s Bounce Back Loan by considering the events that came after the closure of R’s business account and the creation of the loan servicing account. I say this because it is R’s responsibility to meet the Bounce Back Loan repayments in full and on time. Not doing so is an event of default under the terms of the Bounce Back Loan agreement. Even if I were to accept the arguments made by R’s director, I’m satisfied that R missed several loan payments after the loan servicing account was opened. I’m further satisfied that R was aware of these arrears but didn’t engage with Lloyds about repaying them. I will explain further. R’s loan servicing account was open by February 2024. R had already missed the loan payment for January 2024 but also went on to miss the contractual monthly repayments in February 2024, March 2024, April 2024 and May 2024. R’s first deposit into the loan servicing account was on 31 May 2024. But due to an unpaid fee this wasn’t enough to cover June 2024’s loan payment. So R missed all six loan payments between January 2024 and June 2024. During this time I can see that Lloyds sent R multiple (correctly addressed) letters saying that R had missed Bounce Back Loan repayments. These letters invited R to make a payment online or over the phone but also said that R should contact Lloyds if there was any reason R couldn’t meet the repayments. The letters also said R could apply for some of the Pay As You Grow forbearance options, such as repayment holidays. Moreover, I can see that Lloyds phoned R’s director on 16 May 2024. The notes I’ve seen satisfy me that Lloyds told the director that the loan was in arrears. Further call notes show

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that R’s director phoned Lloyds in July 2024 after receiving the bank’s formal demand for repayment of the lending. None of these records suggest R would make up the arrears or wished to discuss with Lloyds potential options for repayment arrangements. These things considered, I’m satisfied that R was aware of the arrears that existed. I think it was up to R to try and address these arrears or, at the very least, engage with Lloyds about options for repaying them. Lloyds says that due to the other complaints R had raised the bank didn’t pass the loan to its recoveries department until October 2024. And I can see R made the loan repayments from July 2024. But, even with this extra time, R didn’t make attempts to address the arrears that already existed. R’s director maintains that Lloyds is responsible for the missed payments because it closed R’s account. I understand his position. But I’ve explained why, due to events after that closure, it was fair for Lloyds to consider the Bounce Back Loan in default given the number of missed payments and the length of time the loan was in arrears. So I won’t be asking Lloyds to do anything here. My final decision My final decision is that I do not uphold this complaint about Lloyds Bank PLC. Under the rules of the Financial Ombudsman Service, I’m required to ask R to accept or reject my decision before 31 March 2026. Laura Colman Ombudsman

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