Monzo Bank Ltd · DRN-5931638

The complaint Miss S complained about the way Monzo Bank Ltd administered her current account. What happened The circumstances of the complaint are well known to the parties, so I won’t go over everything again in detail. Monzo applied a default to Miss S’ current account in April 2022 as she exceeded her overdraft limit and it didn’t receive payment to the account. It sold the account to a debt purchaser I’ll call P in February 2023 and Miss S then paid the outstanding balance in April 2023. Both Monzo and P recorded the debt as satisfied. In April 2025 Miss S complained to Monzo that there were two defaults showing on her credit file. One recorded by Monzo and another recorded by P - however as Monzo had sold the debt, she said that the account should have been marked as sold or closed. Monzo didn’t agree that it was reporting information to the credit reference agencies incorrectly. In its final response letter in July 2025, it said that Miss S would need to contact the credit reference agencies or P to amend any duplicate records. After Miss S referred her complaint to the Financial Ombudsman Monzo acknowledged it could have handled the complaint differently and investigated further. However it said that it had no records to show that Monzo was reporting the information incorrectly. It offered £100 compensation, which Miss S didn’t accept. She explained that the two defaults had impacted her ability to obtain credit and affected her mortgage application. An investigator forwarded Miss S’ concerns to Monzo along with a copy of her credit file. They also informed Monzo that Miss S wanted £1,000 compensation for the incorrect reporting on her credit file and the impact this had on her. Monzo agreed to compensate Miss S £300 as it said it wasn’t aware of the way the information was reporting on Miss S’ credit file. Miss S didn’t accept this. Once Monzo investigated the way the information was being reported on Miss S’ credit file it said that it hadn’t made an error. It said the credit report Miss S obtained from a particular credit reference agency, didn’t remove the record once the debt was sold. It explained the format Miss S had provided was in a legacy format and doesn’t display the information the way that the credit reference agency’s online credit tool does, which shows the account had been sold in 2023. Because Monzo didn’t think it made an error in the way the information was reported to the credit reference agencies it said that it would only offer £100 compensation. The investigator considered Monzo’s offer and said that they thought it was fair. They didn’t think there was an error in the way Monzo reported the account and didn’t think there was sufficient evidence to show that the impact Miss S said she had experienced was as a result of Monzo’s actions. Miss S didn’t agree. She said that two defaults had been displayed on her credit file for over three years, and she said that as a result her mortgage had been declined and she had costs including broker fees and the costs to monitor her credit file. She said she had to get a

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mortgage at a higher rate, and this had impacted her by causing stress and reputational damage. As the matter remains unresolved it 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. I want to acknowledge I’ve summarised the events of the complaint. I don’t intend any discourtesy by this – it just reflects the informal nature of our service. I’m required to decide matters quickly and with minimum formality. But I want to assure Miss S and Monzo that I’ve reviewed everything on file. And if I don’t comment on something, it’s not because I haven’t considered it. It’s because I’ve concentrated on what I think are the key issues. Our powers allow me to do this. Miss S has said that Monzo made an error as the default that it recorded remained on her credit file despite the account being sold to P. I can see from Monzo’s system notes it last reported information on the account in February 2023 which reflects the account conduct and that the debt was sold to P. So, I’m satisfied it was reporting the correct information. From the credit file evidence provided by Miss S, I note a minor difference in the default balance reported. This shows that P recorded the default as £275, while Monzo reports £276. Monzo has explained that the balance at the point of default was £275.99 and that the credit reference agency may have rounded this figure up. I agree with the investigator that this difference is not material and does not indicate the presence of two separate defaults. The account opening date and default date are the same in both entries. In addition, Monzo marked the account satisfied which indicates that the debt had been passed on rather than remaining outstanding with Monzo. Miss S has stated that the presence of this information on her credit file caused her financial loss. While I recognise it would have been upsetting for Miss S to learn that her mortgage and loan applications were declined, the information she has provided from her mortgage broker shows that these decisions were made due to adverse information on her credit file. Miss S said that it is because two defaults are shown – one recorded by Monzo and one recorded by P. However, I also note that the information from her mortgage broker also referred to a separate default recorded by another financial firm in 2021. I’m persuaded that even if the default recorded by Monzo was taken into account, it would have been considered alongside this additional adverse credit history. Although Miss S has supplied information from her mortgage broker, I don’t find that this evidence demonstrates that she was solely declined credit or given a higher interest rate because a default was showing on her credit file recorded by Monzo and was a determining factor in the lending decisions. I acknowledge the difficulties consumers face in obtaining detailed explanation for lending outcomes however mortgage and loan decisions are complex and are typically based on a range of factors. I haven't been provided with sufficient evidence to conclude that Miss S was refused credit or offered less favourable terms directly as a result of Monzo's actions. So I don’t find grounds to direct Monzo to pay any compensation to Miss S on this point. Putting things right I have considered the compensation Monzo offered. I agree that Monzo should have investigated Miss S’ complaint in more detail and provided her with a clearer explanation of

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the information it had reported since February 2023 and requested any additional information needed to progress the matter. In these circumstances I consider the £100 compensation offered by Monzo to be a fair resolution to the complaint. I don't require it to do anything further. My final decision My final decision is that I uphold this complaint and direct Monzo Bank Ltd to pay Miss S £100 compensation. I make no further award. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss S to accept or reject my decision before 25 March 2026. Amina Rashid Ombudsman

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