Removal of ‘adverse’ records on file

[Floppy Sock]

Hi everyone, just fishing for people’s thoughts on my situation.

I defaulted on 2 Credit Card debts back in 2018 & 2019 which were then passed onto Debt collection agencies where I’ve been paying small payments towards them.

I recently decided to raise complaints with the original CC companies as looking back, the level of credit they gave me access to, credit limits and general handling of my accounts seemed irresponsible when considering my financial situation at the time. Both disagreed so I raised the cases to the FOS, where the adjudicators upheld my complaints and ordered the CC companies to refund all charges and interests and remove any adverse records from my credit file in relation to these accounts.

Both balances with the debt collection agencies are due to be adjusted by removing the interest and I’ll still be liable for the (now much smaller) remainder - basically I’m paying back what I spent. All fine by me and a good result all things considered.

Now I’m wondering what to expect in terms of my credit file considering the debts still remain with the DCAs? As far as I can tell the accounts are still on my credit file (against the DCAs) both with the original default date etc.

If the CC companies remove the defaults/missed payments records from my file but the defaults still remain reported by the DCAs then this aspect of the complaint resolution is a pointless exercise is it not? I’ll still be adversely impacted by the actions that have been deemed irresponsible and not per the FCA regulations in terms of lending

Should I expect all record of the debts to be removed from my credit file or just the records that were originally handled by the CC companies? I’ve reached out to both DCAs as they’re aware of the resolutions and only one has replied so far and reading between the lines they’ve basically said they’ll keep reporting the account as they have been unless they’re instructed to stop by the original lenders.

Has anyone else been in a similar situation?

thanks!

[R0b]

Hi,

First and foremost, have you accepted the Ombudsman's decision because it only becomes legally binding if you do.

Debt collection agencies simply act on behalf of creditors so it's important to ensure the terminology you are using in this context is correct. If the position is correct that you are paying a DCA then the original lender would still be deemed the creditor for the purposes of reporting to your credit file and only the original lender should do this, not the DCA whose job is to simply collect the money.

So the part where you mention the DCA continuing to report adverse entries to your credit file would be strange because of what I have said above. However, it is quite common that original creditors might sell the debt to a debt purchasing company and in those cases the 'creditor' will then be the debt purchasing company and not the original lender. The original lender would then usually remove the any adverse entries reported and it would be up to the debt purchasing company as the new creditor of the debt, to report those adverse entries correctly.

With that in mind, here's my initial take on things

Scenario 1: Original lender is the creditor and you are paying a DCA. As above, I don't believe the DCA should have the power to report adverse entries to your credit file but even if they did, the original lender has responsibility for that DCA. According to your post, the original lender should remove all entries and also notify the DCA that a decision has been made, however if you have supplied evidence of the FOS decision and confirmation you have accepted that decision which now becomes legally binding, that DCA should have a duty to investigate and confirm with the original lender the current status. It would be very ignorant and naive of the DCA to state that (assuming it has credit reporting powers) it will continue to report these adverse entries until told otherwise. In that case, you would have a valid claim against the lender for breach of data protection on the basis of them reporting inaccurate data, as well as negligence and I would think you have a claim of negligence against the DCA possibly amongst other things as they would owe a duty of care to investigate.

Scenario 2: The DCA has actually purchased the debt and is the debtor. In this case the same points in scenario 1 applies except that any legal actions you might bring would be against the DCA as the creditor of the debt rather than the original lender.

In most normal circumstances, threatening legal action would usually prompt a response but even if they ignored it, you would definitely get a response once you commenced legal proceedings. The good thing about this is that if you have accepted the FOS decision it is legally binding and therefore you would need to get that decision rubber stamped into a court order to enforce.

[Floppy Sock]

Hi,

First and foremost, have you accepted the Ombudsman's decision because it only becomes legally binding if you do.

Debt collection agencies simply act on behalf of creditors so it's important to ensure the terminology you are using in this context is correct. If the position is correct that you are paying a DCA then the original lender would still be deemed the creditor for the purposes of reporting to your credit file and only the original lender should do this, not the DCA whose job is to simply collect the money.

So the part where you mention the DCA continuing to report adverse entries to your credit file would be strange because of what I have said above. However, it is quite common that original creditors might sell the debt to a debt purchasing company and in those cases the 'creditor' will then be the debt purchasing company and not the original lender. The original lender would then usually remove the any adverse entries reported and it would be up to the debt purchasing company as the new creditor of the debt, to report those adverse entries correctly.

With that in mind, here's my initial take on things

Scenario 1: Original lender is the creditor and you are paying a DCA. As above, I don't believe the DCA should have the power to report adverse entries to your credit file but even if they did, the original lender has responsibility for that DCA. According to your post, the original lender should remove all entries and also notify the DCA that a decision has been made, however if you have supplied evidence of the FOS decision and confirmation you have accepted that decision which now becomes legally binding, that DCA should have a duty to investigate and confirm with the original lender the current status. It would be very ignorant and naive of the DCA to state that (assuming it has credit reporting powers) it will continue to report these adverse entries until told otherwise. In that case, you would have a valid claim against the lender for breach of data protection on the basis of them reporting inaccurate data, as well as negligence and I would think you have a claim of negligence against the DCA possibly amongst other things as they would owe a duty of care to investigate.

Scenario 2: The DCA has actually purchased the debt and is the debtor. In this case the same points in scenario 1 applies except that any legal actions you might bring would be against the DCA as the creditor of the debt rather than the original lender.

In most normal circumstances, threatening legal action would usually prompt a response but even if they ignored it, you would definitely get a response once you commenced legal proceedings. The good thing about this is that if you have accepted the FOS decision it is legally binding and therefore you would need to get that decision rubber stamped into a court order to enforce.

Hi Rob - thanks for the comprehensive and informative reply. Both myself and the original creditors have accepted the FOS decisions.

How would I go about determining if they debts have been sold to the DCAs as opposed to the DCAs simply handling the collection? Barclaycard have already made contact with Lowell and my balance with them has been adjusted in line with the resolution ordered.

No such adjustment has been made by MBNA against the debt Link hold yet, nor have I received any communication from MBNA regarding the resolution (I've been back in touch with the FOS regarding the lack of action from MBNA).

Both debts on my credit file have the DCAs names attached to them with the original default dates from when they were with the original creditors. I can't seem to find any reference to the MBNA or Barclaycard accounts on there - at least on Transunion anyway. It looks like the DCAs have taken on the full details and reporting for these debts.

I've forwarded the full FOS decisions to both DCAs and awaiting their responses on how they interpret the decisions.

[Floppy Sock]

Hi all, it’s been a while and I’ve got a rather strange update on the above.

MBNA arranged a balance reduction with Link Financial which only ended up being £600 or so - I set up a payment plan with link at £30 a month to pay off the remaining £6k.

MBNA got in contact to advise that once the balance with Link had been settled, they’d remove the default. At this point I stopped chasing this as the default would be removed long before I’d be able to pay it back.

However something extraordinary happened with this account in December. I tried to access the debt with Link via their online portal and the debt had been removed from my account. A couple of days later I received a letter from MBNA advising that they’d arranged for the remaining balance to be waived and for the default and account to be fully removed from my credit file. Their reasoning being that they’d reviewed my account including some reduced payment offers they’d sent many years (and that I’d accepted) and that after those offered ended, they’d forgotten to put my payments back up to the standard minimum amounts. They’ve not said anything else regarding this, just that because of this they would like to apologies and have waived the remaining balance. To say this is a great result is an understatement.

The Barclaycard debt held with Lowell is a different story - the debt was reduced as per the ombudsman agreement however the default remains on file recorded by Lowell. I queried this with Lowell who basically said they don’t care what Barclaycard have agreed, they’ll continue to report the default. I’ve argued that as Barclaycard don’t consider that the default exists, they should remove it.

I’ve since written to the Barclaycard CEO complaints asking them if they’ll be ensuring Lowell do not report the default, as per the complaint resolution. I explained that I’d have never accepted the resolution would I have known the default wouldn’t have been removed from my credit file. They’ve asked Lowell to put the account on hold while they look into this.

[Floppy Sock]

Final update on this one:

Firstly MBNA - balance written off and all adverse credit records including default have been removed from my credit file.

Barclaycard - after writing to their CEO they agreed to have the balance written off and all adverse credit records including default have been removed from my credit file.

I still have 3 defaults on file for debts I’m repaying via payment plans (~£2k worth). However these defaults will drop off at the 6 year mark in March 2025, after which I’ll begin responsibly and safely rebuilding my credit file!