Lloyds Bank PLC · DRN-5041439

The complaint Mr J complains that Lloyds Bank PLC (‘Lloyds’) should pay more compensation than offered so far in connection with poor service issues arising when his debit card was blocked. What happened In brief summary, whilst Mr J was abroad, Lloyds blocked a transaction he had attempted with his debit card when it was flagged for a security check. Unfortunately, even after the block was removed, he still had issues using his card which left him without access to cash and unable to make some payments. The cost of phone calls to the UK, as well as connection issues when trying to speak to Lloyds, made it difficult for Mr J to sort things out over the phone. He spent many hours messaging Lloyds in an effort to try and resolve the problems with his card and in the end, made an unplanned return to the UK. He would like Lloyds to reimburse his flight costs and compensate him for distress and inconvenience. Lloyds said the card was blocked to protect Mr J’s account – and unblocked when he ‘self- served’ and confirmed the transaction was genuine. Lloyds said the further problems he then encountered when trying to use his card were due to the ‘Chip and PIN’* functionality of the card being compromised, which was nothing to do with Lloyds having blocked the card. Lloyds admitted however that it could have provided a better service when he’d contacted Lloyds to sort out the issues with his card and paid him £50 compensation to make up for this. When Mr J brought his complaint to us, our investigator recommended Lloyds should pay Mr J an additional £100 compensation in respect of distress and inconvenience – bringing the total redress amount to £150. Lloyds accepted this recommendation. Mr J, however, didn’t agree with the investigator’s proposed settlement, mainly saying (in brief summary): • the situation he found himself in was entirely due to Lloyds blocking the card in the first place. • He wouldn’t have needed to try his card in multiple Automated Teller Machines (ATMs) if it hadn’t been blocked and so the chip wouldn’t have been damaged. • The card was blocked when he had already authorised payments using biometrics. • The attempted transaction that was blocked was for just £6 or so. • The repercussions led to Mr J being stranded in a foreign country, without food, water or shelter - and cut short his travel plans for the next six months. • Despite repeated requests, Lloyds didn’t send the final resolution letter via email as he requested. • £100 compensation is inadequate to reflect what happened. Mr J has asked for an ombudsman to review the complaint, so it has come to me to decide. * Chip and PIN is a payment method that requires a customer to: 1. Insert their bank card into a card reader, such as a merchants terminal in a shop or restaurant or an ATM and

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2. enter their personal Identification number (PIN). 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’ve carried out an independent review and having done so, I’ve reached the same conclusion as our investigator. I've carefully listened to the call recordings of Mr J’s discussions with Lloyds. I can understand just how stressful Mr J found this whole experience and I sympathise – being stranded in a distant foreign country without access to cash, where merchants often aren’t able to accept card transactions, would test anyone’s resourcefulness to the limit. I’m very sorry that Mr J had this experience and he cut short his overseas travels in such trying circumstances. I’ve approached this complaint in a way that reflects the informal complaint handling service we provide. My role is to consider the evidence presented by the parties and reach an independent, fair and reasonable decision based on the facts of the case and the evidence provided by both sides. In doing so, I may not address every single detail that’s been mentioned and I've summarised what happened only briefly and often in my own words. But it doesn’t mean I haven’t considered the evidence and what’s been said here – it just means I haven’t needed to specifically refer to everything in order to reach a decision in this case. As I understand Mr J’s complaint, he believes that things went wrong because Lloyds blocked his card on 26 April 2024 due, he says, to ‘incompetence’ and this stopped the chip in the card working after that. He put things this way: ‘…I wouldn’t have ever found myself in that position if they didn’t block the card in the first place.’ I’ve kept in mind that banks have an obligation to take steps to keep customers’ accounts safe and prevent fraudulent transactions. Sometimes this can mean the bank identifies and blocks legitimate payments that a customer wants to make. Understandably, this can cause distress and inconvenience to a customer – as it undoubtedly did here, for Mr J. But it doesn’t necessarily mean the bank has acted incorrectly or unfairly. Checks undertaken as part of Lloyds’ security process are designed in the interests of Lloyds’ customers to help keep their money safe and prevent fraudulent activity on their accounts. Lloyds system flagged Mr J’s attempted payment for a fraud check. Lloyds’ terms and conditions, which Mr J would’ve signed up to in order to be able to use the account, allow Lloyds to stop payments being made in these circumstances. It makes no difference that the transaction was only for a small amount or that he’d already completed some initial verification. Lloyds identified that further checks were needed. This is why Mr J’s card was blocked and I am satisfied that Lloyds acted in line with its business terms when it did this. I don’t find that Lloyds made any error when it blocked the card. The card was unblocked when Mr J confirmed the transaction was genuine and he was able to use his card after this for other transactions on 26 April 2024 and the next day. But he also had declined transactions on 27 April 2024 and he wasn’t able to use his card to obtain cash from ATMs. Mr J thought there was a direct link between the card being blocked and the Chip and PIN function not working because this problem started after the card was unblocked and he’d seen this suggested on the internet. But I can’t uphold a complaint just on the basis of unverified anecdotal evidence.

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My findings are made on a balance of probabilities, in other words, what is more likely than not, based on the evidence provided by the parties. I haven’t seen anything else that suggests a direct connection linking Mr J’s ongoing problems being able to use the card with Lloyds having blocked his card. Lloyds said that the block it applied wouldn’t (and couldn’t) have affected the chip in the card. Lloyds has provided evidence showing Mr J was able to use his card after it was unblocked – and that declined transactions on 27 April were reported with codes that indicated the magnetic strip was read instead of Chip and PIN. In other words, there was a problem with the actual chip in his card and/or the terminal trying to read the card. Other payment attempts were declined when he reached the daily £50 account limit for international contactless transactions. And one particular transaction he tried to make on 28 April 2024 was declined because the session had expired before the payment was processed. Mr J thought that repeated attempts to use the card in ATMs might’ve caused physical damage to the chip and that seems the most likely explanation to me. Overall, I haven’t seen enough to show that the continuing problems Mr J had accessing cash in ATMs and using his card for Chip and PIN transactions were due to anything Lloyds did wrong. And the other payments were declined in line with the account terms for using the card to make contactless payments overseas, and when a transaction timed out before it was concluded. On balance, I can’t fairly say in these circumstances that Lloyds was responsible for any of these failed transactions. Nonetheless, Lloyds still needed to treat Mr J in a fair and reasonable way. Having seen the transcript of Mr J’s chat history and listened carefully to Mr J’s discussions with the various call handlers, I think Lloyds fell short of providing a reasonable level of customer service when things went wrong for Mr J in some key respects. The matter could have been handled more effectively by Lloyds when Mr J was using its Live Chat service – which Lloyds agrees. It could have provided him with a number to call from overseas and reminded him that he could still use his card online. And Lloyds accepted that it had issues with calls dropping. On further consideration, Lloyds agreed that it should pay additional redress to reflect fairly the shortcomings in the service provided to Mr J, as recommended by our investigator. Our approach to redress is to aim to look at what’s fair and reasonable in all the circumstances of a complaint. One way we would try and do this impartially here is to put Mr J in the position he’d be in if Lloyds hadn’t been responsible for poor service issues. So my starting point is to think about the impact on Mr J of what happened. I haven’t seen enough overall to persuade me that I can fairly hold Lloyds responsible for Mr J’s financial losses, including the cost of his flight home. That’s because I haven’t found that Lloyds did anything wrong when it blocked his card and it wasn’t responsible for the fact Mr J couldn’t use his card in cash machines or to make Chip and PIN transactions after it was unblocked. Lloyds had promptly issued a replacement card in the UK but Mr J could still use his existing debit card for transactions up to the daily limit that didn’t involve chip and PIN. When thinking about what’s fair and reasonable here overall, I've kept in mind the ombudsman approach is to take into account what people can do themselves to mitigate the impact of things going wrong. Various options were open to Mr J such as carrying another card, and/or possibly even a credit card if available, so he could still access cash if his Lloyds’ debit card was blocked (which was always a possibility) or he found he couldn’t use it for some other reason. And for people in Mr J’s circumstances, carrying a prepaid overseas money card (sometimes called a travel money card) is often recommended when

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travelling - and this could have been useful to Mr J in this situation. Lloyds wasn’t responsible for the fact that Mr J had only his Lloyds’ debit card and no other means of payment or accessing cash so that he felt he had no option but to return to the UK. But fair compensation isn’t just about monetary loss – it also needs to properly reflect the wider impact on Mr J of Lloyds’ poor service. The £150 overall figure suggested by the investigator matches the level of award I would make in these circumstances had it not already been proposed. I don’t doubt that Lloyds’ poor handling of matters, as described above, caused Mr J significant distress and inconvenience. I am satisfied that the £50 Lloyds has paid already is insufficient in these circumstances. I consider that a further £100 payment, bringing the total amount of compensation to £150, is in line with the amount this service would award in similar cases, and fair compensation for Mr J in his particular circumstances. I’m aware that Mr J has mentioned a complaint about the way Lloyds managed its complaint process. As that wasn’t part of his original complaint to Lloyds, I can’t comment on that. But I would just mention here that the industry regulator, the Financial Conduct Authority (FCA), says our service can only look into complaints about regulated activities, and complaint handling isn’t a regulated activity. We can however consider the customer service provided and that’s the way I’ve approached this complaint. I hope that setting things out as I've done helps to explain how I've reached my conclusions. Putting things right Lloyds should pay Mr J £150 compensation in total to reflect the extent and impact on him of its poor service. Lloyds can set off against my award the £50 it has already paid Mr J in connection with this complaint – so in effect, it is required to pay Mr J the further sum of £100 (if it hasn’t yet done so). My final decision I uphold this complaint and Lloyds Bank PLC should take the steps set out above to put things right. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr J to accept or reject my decision before 8 November 2024. Susan Webb Ombudsman

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