Compensation for incorrect default

[Mr Basil]

Hi
I've been offered compensation from NRAM for messing up my credit score and I don't know whether to accept it?

Basically, we've been fighting with them continually for years as one of the old Together mortgage customers. We were on a DMP for 7 years, they were charging us exhorbitant interest into a separate arrears account, meaning we came off the DMP owing more than we'd originally borrowed... We sold our house, paid off all other creditors, but NRAM would not negotiate.

Anyway, we're trying to pay them off as quickly as possible and get on with our lives. Our credit score has been in the toilet since 2009, which makes life very difficult sometimes.

I recently found out that defaulted payments should disappear from your credit file after 6 years. Now, I want to be clear that although on a DMP and having made payment agreements with NRAM, we NEVER stopped paying them. So, I complained to them as I noticed that our credit report showed that we were still defaulting.
We came off our DMP 2.5 years ago and have been paying them 3 times the required payment every month since then, so this didn't seem right.
They have come back to confirm that this shouldn't have happened and have agreed to change our credit report to remove the default.

To be clear they have adjusted our Credit Score to show we stopped defaulting in August 2011. So, our score has been affected by this in error for 8 years.

They have also offered £500 for the 'trouble and upset caused' by their error. They have enclosed something to sign that this is 'full and final settlement of my complaint'.

Having dealt with these people for 10 years, I am suspicious that they are agreeing to this.

Any advice please on whether this is something to take further?
Or am I looking a gift horse in the mouth?

[R0b]

Hello

I'm going to tag @pt2537 as he has some knowledge regarding NRAM and may be able to offer more insight than what I'm about to say which is more of a generalised position.

Correct me if I am wrong but your dispute seems to fall under the Data Protection Act 1998 and not the recently enacted 2018 Act and the GDPR so any claim would have to be considered under that legislation, unless the defaults had been applied after 25 May 2018 in which case there is overlap between the two.

On the face of it, NRAM are likely to be in breach of Principle 4 of the 1998 act which requires them to ensure that data is accurate and where necessary, up to date. Given the importance of credit in today's society, ensuring that information regarding your credit history is accurate and up to date is crucial and one would expect NRAM to have some kind of procedures in place so that reasonable steps have been taken to ensure the accuracy of the data they are reporting i.e. a written procedure.

There is probably some crossover with Principle 1 about processing the data lawfully because they shouldn't have continued to report a default after the 6 year period expired.

In terms of whether there amount being offered by NRAM is tricky because there is no real guidance as to the levels of payment a court might award. This is because breaches under the DPA are always going to be fact specific and that and will likely depend on the effect it has had on the individual. For example, to what extent has the breach caused distress and inconvenience and whether it has resulted in the individual suffering damage. To add to that, there are very few reported cases relating to breaches of personal data so the spectrum of compensation is going to be wide.

With that said, there is some case law that may be of assistance to you, one of those cases being Halliday v Creation Consumer Finance (Link here). CCF reported incorrect information to credit reference agencies over a period of 4 months before it was updated and the court awarded £750. The second one is Foster-Burnell v Lloyds TSB (Link here) and I think PT was involved in that case so he might be able to give you a better explanation of its relevance. In that case the court made an award of £1,000.

Both cases are not directly applicable particularly that the default remained on file for 8 years, a period of time much longer than the Halliday case so it would appear would appear that NRAM's offer of £500 is somewhat on the low side. Equally, there may be an argument for aggravated damages in addition to compensation although one factor (but not necessarily the only one) may be whether it actually had an impact on you when you applied for credit in the last 8 years and/or if there are other adverse entries that are on your credit file which may have contributed. There is some authority on how much a court might award under aggravated damages, which was explained in Thomspon v The Commissioner of the Metropolitis where the court said:-

"We consider that where it is appropriate to award aggravated damages the figure is unlikely to be less than a £1,000. We do not think it is possible to indicate a precise arithmetical relationship between basic damages and aggravated damages because the circumstances will vary from case to case. In the ordinary way, however, we would not expect the aggravated damages to be as much as twice the basic damages except perhaps where, on the particular facts, the basic damages are modest."

I think it really depends on how far you are prepared to take it. You could make a formal complaint and then on to the Finacnial Ombudsman on the basis that they failed to ensure your data was kept accurately. They may be more inclined to award you a higher sum of money than what NRAM are offering, though if they think it is reasonable then you could still reject that position and go to court.

[Mr Basil]

Thanks - this is very interesting.
It’s definitely caused considerable distress over the years and our low credit score has caused a lot of embarrassment. NRAM have been hell to deal with compared to all of our other creditors.

But, I’m not sure how much the NRAM thing on its own has affected the score, so I’m kind of interested to see. Certainly our score has improved slightly over the years in that we’ve been able to get some credit with super-high interest. But, I’m guessing it’ll take a couple of months for the score to reflect any correction they’ve made?

The interesting thing I thought was that, for the most part, our other creditors did not mark us as defaulting as we had made an agreement with them. We did this in advance of defaulting and always stuck to the agreement over the 7 year period.

Of course, we have no way of paying for legal action, so it’s unlikely we’ll take further, but I’m just interested if they are pulling a fast one...

[Mr Basil]

OK, so now i'm really confused.

I originally posted elsewhere on a financial forum, thinking that someone there may have dealt with NRAM before or had some experience of credit scores.
I'm kind of surprised that the general consensus seems to be that this is all fine and I should feel lucky to have been offered any money at all.

But, poor as I am, I couldn't really give a toss about the £500.

The more I think about this, the more I'm thinking of what a massive effect the last 8 years of incorrect data may have had on my credit worthiness and therefore my life in general.

I don't really understand credit scores to be honest, but surely them reporting that I've constantly defaulted payments on a £25k loan over 8 years will have had some effect?

I've been rejected loads of times, even for trying to change bank accounts. I can't get an overdraft. I've had to go through investigations and sign declarations when applying for jobs. I sold my house a couple of years ago and when I started renting I had to pay an extra £9000 up front because of my credit rating. I've even lamented turning down the option of bankruptcy, as I know of others that did so after my issues started, who were able to 'start again' and get mortgages etc.

But now, I have no idea what's coming. Will there be no effect on my credit score in the short term? Will there be a massive effect? If there's no effect, how can I really tell if the records have been changed going back 8 years?

I'm starting to think that I need someone to investigate this and look into what effect this has had. Would a solicitor with financial experience be able to do this?
Where would I find someone who can help? Not sure how I'd pay for it - maybe I'll be able to get a loan now...

Any advice gratefully received!

[R0b]

If you want a solicitor to act on your behalf then you are likely to pay for it. The likely sum of money involved is not going to be commercially viable for most lawyers to take on your case, unless of course it is pro-bono but then your pool is much much more limited.

Given that this is all really academic unless you do take action, I'm not really going to comment much further than what I've said in my previous post. If you aren't bothered about the £500 then I don't know what it is you really want. Yes the default will have had an impact on your credit score and potentially the ability to obtain credit at better interest rates, but if you have multiple defaults or late payments from other credit accounts then it would be difficult to pin it down to the default as being the cause of your rejections.

Defaults only stay on your credit file for 6 years and then are wiped off, so if the default record was in 2011, there should be no other defaults listed on the NRAM account and your credit report should be clean in that respect.

Don't overthink it and keep it simple. You don;t need to think about a lawyer right now, either accept the £500 or don't and move on. Alternatively, raise a formal complaint and if your still not satisfied then escalate ke it to the Financial Ombudsman.

I've given you sufficient case law to position your complaint so that should be your starting point if you want to pursue it.

[Mr Basil]

Thanks Rob.
I wasn't very clear, but they had continued putting defaults on the payments we had made to them in the last few months, so this was a very recent thing. There weren't any other defaults from other companies, as they were all happy that we'd made agreements when we got into difficulties. Regardless, we have been clear of other creditors for coming up 3 years, so I guess my meaning was if we saw a jump in our credit worthiness now, it would be evident that this was to blame.

You've been fantastically helpful and I'll discuss with my wife whether or not we should make a complaint, based on the cases you cite.

Thanks again.