National Westminster Bank Public Limited Company · DRN-6153652

The complaint Ms M and Mr P complain National Westminster Bank Public Limited Company (“NatWest”) acted unfairly in recalling an arranged overdraft and defaulting their joint account. As this was a joint account, both Ms M and Mr P are party to the complaint. However, as Mr P has been responsible for communicating with this Service, I have referred to him throughout. What happened In April 2025 Mr P received notification saying another party on his account had been declared insolvent, so NatWest had restricted its use. He contacted NatWest in May 2025 and was notified the account had been defaulted and he’d need to repay the outstanding overdraft, which he did. As the default wasn’t subsequently removed, Mr P complained. NatWest reviewed matters but overall didn’t think it had acted unfairly. It said it was notified in April 2025 that the joint party to Mr P’s account had entered an Individual Voluntary Arrangement (IVA). And as such it was required to restrict the account and act immediately. Because there was an arranged overdraft on the account, that was in use, the account was defaulted and information shared with Credit Reference Agencies (CRA’s). It confirmed it had since recorded the default as settled, following repayment in May 2025. It did however agree it had taken too long to respond to his complaint, but for this it paid £75 compensation. As Mr P didn’t think this resolved matters, he referred the complaint to this Service. He said he wasn’t notified of the issue until 25 April 2025, by which point it was too late to prevent the default being applied. An Investigator here reviewed matters, but didn’t think NatWest had acted unfairly. They explained as the account was joint, when one party entered into an IVA, NatWest was reasonable to recall the overdraft and default the account immediately. They also said NatWest had correctly recorded the default as settled to CRA’s. Mr P didn’t agree, and said he’d had a good credit rating and was operating the account correctly. As such he considered NatWest should have restricted the joint party’s use only, rather than his and not have defaulted the account. He said he’d settled the account as soon as he became aware of the issue and the default had a significant impact on his credit file, through no fault of his own. As no agreement has been reached, the complaint has 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. In doing so, I’ve taken into account the relevant industry rules and guidance, and what would be considered as good industry practice.

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Firstly I’d like to say I was genuinely very sorry to hear about the situation Mr P has found himself in here. I can appreciate it would be undoubtedly disappointing to find out an account, he was party to, had been defaulted, as a result of another party entering an IVA. As a starting point, I think it would be helpful to point to guidance from the Information Commissioner’s Office (ICO). This sets out various expectations which may result in a default being recorded. Of importance here is when: “The account is or has been included in a bankruptcy, CCJ, Individual Voluntary Arrangement (IVA) or similar.” In some instances, lenders have a requirement to notify its customers of the intention to register a default. However, the guidance is specific in saying that doesn’t apply when the account has been included in an IVA, as was the case here. In those instances, the ICO says the lender does not need to provide notice and can file a default as soon as it becomes aware of the situation. In situations such as this, it’s also generally accepted the default date is the date the IVA was entered – which is the case here and as such seems reasonable. In this case, NatWest was notified that a joint party to the account had entered an IVA, which included this account, in April 2024. Based on the ICO’s guidance, I can’t agree NatWest made an error by defaulting the account without providing notice to Mr P. Even though Mr P wasn’t party to the IVA, NatWest was also entitled to ask him to repay the overdrawn amount. It’s something he agreed to within the terms and conditions, which set out all parties are jointly responsible, and can be asked to repay, even if one party is unaware the overdraft has been used or isn’t subject to insolvency. As such I can’t agree NatWest acted unfairly in defaulting the account when it did, or asking Mr P to repay the funds. I note NatWest wrote to Mr P in April 2025 explaining what had happened and that it would be restricting the account. He contacted it in May 2025 and was informed the account had been defaulted and the overdraft had become immediately repayable. I appreciate Mr P repaid this in full, but the default had already been applied, which is reasonable, for the reasons explained above. Once Mr P had repaid the overdrawn amount, I’ve seen NatWest notified CRA’s the default was settled, as I’d expect. But this doesn’t mean it should then be removed from his credit file as defaults will remain on a credit file for six years. On this point, I am aware Mr P has said one of the CRA’s isn’t reporting the default as settled, but as our Investigator explained he’ll need to contact the CRA directly about this. That’s because, based on the evidence I’ve seen, NatWest has reported the default as settled to the CRA’s in the way I’d expect. I understand Mr P has been impacted by the default being recorded on his credit file. I can appreciate this will have caused Mr P a significant amount of distress and inconvenience as a default on a credit file will often have an impact on future lending. However, in order to uphold this aspect of Mr P’s complaint, I need to be satisfied an error caused solely by NatWest led to these issues. But as I’ve explained above, I haven’t found NatWest has made an error here, so it would be unfair to hold it responsible for the difficulties Mr P may face as a result. For completeness, I should also say, NatWest paid Mr P £75 compensation for delays caused in responding to his complaint. I’m aware our Investigator said this wasn’t something

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they could comment on, but I think it is, as it’s ancillary to Mr P’s complaint about the way NatWest handled his account. But having considered this, I think this compensation award is reasonable and in line with what I think is fair. NatWest did cause a short delay in responding to Mr P’s complaint, which would have caused some inconvenience and its right he’s compensated for that. But ultimately, he was still able to bring the matter to this Service and I think the response it gave was fair and reasonable for all the reasons given above. So I won’t be asking it to pay any further compensation for this short delay. Taking everything into account, I have every sympathy for Mr P. He’s been the impacted as a result of another party’s actions and I am genuinely sorry to see this. But I’m satisfied NatWest was entitled to default the account without giving notice and ask for repayment from him, as explained above. And although he’s now repaid the outstanding amount, it doesn’t mean the default should be removed. I also think the £75 compensation it awarded for the delay in responding to his complaint is fair and reasonable. As such I won’t be asking NatWest to do anything further here. My final decision For the reasons explained above, I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Ms M and Mr P to accept or reject my decision before 20 April 2026. Victoria Cheyne Ombudsman

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