Lloyds Bank PLC · DRN-6185557

The complaint Mr B complains that Lloyds Bank PLC unfairly pursued him for repayment of a bounce back loan (“BBL”) that was taken out fraudulently in his name. Mr B has a representative but for ease of reading, I will refer to all comments made by the representative as though they were made by Mr B. What happened In June 2020, a sole trader business account was opened with Lloyds in Mr B’s name. A £50,000 BBL in Mr B’s name was then successfully applied for and the loan funds were paid into the sole trader account. Between 9 and 11 June, BBL funds totalling £25,000 were transferred from the business account to Mr B’s personal account. Mr B also visited a Lloyds branch in June and was questioned about the BBL by a police officer. But no further action was taken. Monthly loan repayments began in July 2021 and were made each month using the £25,000 BBL funds that had remained in the business account. In October 2023, there were no longer sufficient funds in the business account to meet the monthly repayments, so the BBL started to go into arrears. On 11 January 2024, Lloyds issued a formal demand letter requiring repayment of the remaining BBL balance in full and then passed the loan to a debt collection agency to administer on their behalf. Mr B complained and Lloyds initially rejected the complaint. However, after the Financial Ombudsman became involved, the bank acknowledged that they had missed opportunities to offer a better service and resolve things earlier. They apologised and offered to write off the remaining balance of the BBL, remove any information about the loan from Mr B’s credit file, close the business account and pay Mr B £1,000 compensation for the distress and inconvenience caused. One of our investigators looked into what had happened and thought that the bank’s offer to put things right was fair. She said, in summary: • Lloyds had rightly accepted that its service should have been better. • That said, the bank cannot fairly be held responsible for the actions of the third party who coerced Mr B. • Neither can the bank be held responsible for any distress caused by the police questioning. Given the existence of fraud, it wasn’t unreasonable for the branch to have contacted the police.

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• £25,000 of the BBL funds were transferred into Mr B’s personal account. It was therefore possible that Mr B had received some benefit from the BBL, although given the bank’s offer, the use of the BBL funds hadn’t been investigated. • Whist she accepted that the events had caused Mr B distress and exacerbated his health concerns, she needed to consider how much could be attributed to the bank. Taking everything into account, she thought Lloyds’ offer of £1,000 was fair. Lloyds had nothing to add, but Mr B asked for an ombudsman’s decision. He thought that he deserved more compensation, given the length of time this matter had lasted. 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. There is no dispute here that Lloyds could have handled things better. They have apologised for this and made an offer to put things right. What remains for me to decide is whether their offer is fair. Our investigator thought that the bank had offered enough. My review has determined the same. I also agree with her reasoning. Our approach in cases where an error has been made is to expect the bank to put its customer back as close as possible to the position they’d have been in without the error. The first part of Lloyds’ proposed compensation does this by writing off the BBL, amending Mr B’s credit file and closing his business account, thereby putting him in the position he’d have been in if the BBL application had never happened. I consider this to be fair and in line with what I would normally expect. I know Mr B’s representative has argued that everything could have been dealt with when he was interviewed by the police shortly after the BBL was taken out in June 2020. But at that time, my understanding is that Mr B was still under the influence of the fraudster, who had told him what to say. It’s not clear to me from the evidence I’ve seen that the bank should therefore have taken action at that point. On top of the other actions proposed to put things right, the bank has offered £1,000 compensation for distress and inconvenience caused. Mr B is vulnerable. He has been through a horrible ordeal that has made some of his symptoms worse and he has my sympathy. However, that doesn’t mean that the bank should pay more. It seems to me that the main cause of distress here is that Mr B has been the victim of coercion. The bank is not to blame for this, although they could have sorted things out faster. It's important to note that our awards for compensation are generally modest. Our service considers an award of £1,000 to be fair where the impact has been substantial. Our website describes such an award as fair where the bank’s error has caused “substantial distress, upset and worry – even potentially a serious offence or humiliation. There may have been serious disruption to daily life over a sustained period, with the impact felt over many months, sometimes over a year.”

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I think this is a fair description of the severity of the impact of the bank’s poor service here. Taking into account all the circumstances, I have concluded that the bank’s offer of compensation is fair and in line with what our service would have recommended in the circumstances. Mr B has mentioned a breach of the bank’s Quincecare duty. This is an implied duty imposed on the bank where there are reasonable grounds to believe there may be an attempt to misappropriate funds, but it generally applies to separate legal business entities, not to the circumstances here. In any case, the bank has agreed not to hold Mr B liable for the BBL. So Mr B has not been disadvantaged by any payments made to disburse the BBL proceeds. I note that Mr B feels that the bank is unreasonably asking for a copy of his credit files. I can understand why this seems unnecessary, but removing information isn’t always as simple as reversing a previous action, so I think it’s in Mr B’s best interests to supply the information so Lloyds can ensure it is fully removed. I also note that Lloyds has offered to cover any costs, should there be any, of obtaining this information, which I consider fair. Putting things right To put things right, Lloyds should: • Write off the remaining balance of the BBL. • Remove any information about the BBL from Mr B’s credit file. • Close the associated business account opened in Mr B’s name. • Pay Mr B £1,000 compensation for the distress and trouble he’s suffered. My final decision For the reasons explained, I uphold this complaint and direct Lloyds Bank PLC to take the steps described above, as they have offered. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr B to accept or reject my decision before 8 April 2026. Louise Bardell Ombudsman

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