Financial Ombudsman Service Bounce Back Loan Complaints

I do get lots of similar complaints fed my way daily, one bank that certainly is attracting a lot of complaints is NatWest. There are a huge number of people who have found that when applying for a Bounce Back Loan they get told their accounts are being closed, in fact similar stories have been reported in many newspapers too.

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The Telegraph for example reported that NatWest were freezing the accounts of Bounce Back Loan applicants in November, and the Guardian back in July also reported that NatWest customers say accounts were closed after they applied for coronavirus loans  as too did City Am who reported that NatWest closes SME accounts after coronavirus loan applications.

There have also been plenty complaints sent to the Financial Ombudsman Service to about NatWest and below you will find a recent one. Read it through and make your own mind up on who is to blame. Keep in mind too that the complainant did go on to get a Bounce Back Loan with another lender…..

The Complaint

Company U is unhappy with how National Westminster Bank Plc (NatWest) dealt with an application for a Bounce Back Loan.

What happened

Company U applied to NatWest for a Bounce Back Loan, a government supported initiative for small and medium-sized businesses. NatWest considered the application and declined it. But NatWest then contacted Company U and offered the Bounce Back Loan.

A few days later NatWest told Company U the loan had been offered in error, and they cancelled the loan. Company U then obtained a Bounce Back Loan from a different provider. Company U have complained about how NatWest dealt with the loan application. It said that it’d accepted the original decline decision, and considered the matter closed at that point.

But NatWest then offering the loan, and then cancelling it, caused confusion. NatWest offered Company U £400 compensation for the error, but this hasn’t been accepted. And Company U have brought the complaint to us for investigation.

Our investigator said that, given the unprecedented times that caused the government to launch this initiative, and the short timescale in which products like this have been introduced, some teething problems are to be expected.

He said that NatWest made an error when they granted the loan, but they realised this error and took steps to put this right by cancelling the loan. He thought this was reasonable and, in the circumstances, he didn’t think that NatWest needed to do anything more.

Company U didn’t agree with the investigator. The directors have said NatWest offered the loan, they signed the loan agreement, and planned to purchase new equipment as a result. Because of this, they don’t feel £400 is fair, and they think that £1,600 is more reasonable in the circumstances.

So they’ve asked for an ombudsman to make a final decision.

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.

Having reviewed the evidence I agree with the investigator’s findings on this complaint for broadly the same reasons. If I haven’t commented on any specific point, it’s because I don’t believe it’s affected what I think is the right outcome.

The basic facts of this case aren’t in dispute. In May 2020 Company U applied to NatWest for a Bounce Back Loan, and NatWest initially declined this. Then NatWest offered the loan.Which they then cancelled because it’d been offered in error.

Given these facts, I’m in agreement that NatWest could’ve done better. But I don’t think NatWest’s error has had a financial impact on Company U. The Bounce Back Loan was applied for to purchase new equipment. And Company U were able to fund this purchase through a Bounce Back Loan, albeit with another lender.

So Company U hasn’t been left having to purchase equipment it didn’t have the money for, nor has it taken delivery and installed equipment that it’s now had to uninstall and return. So there’s been no financial loss.

Company U is in exactly the same position it intended – it has new equipment funded by a Bounce Back Loan. And as all Bounce Back Loans are guaranteed by the government, the terms are exactly the same, regardless of which lender supplied the funding.

I appreciate that the directors of Company U have found this to be a frustrating experience. And the need to find another lender would’ve been stressful to them. But the loan was offered to Company U in error, and not to the directors in a personal capacity.

Company U is a business, so it can’t suffer any distress or upset. It can suffer inconvenience but, as I’ve already said, given that it was able to fund the purchase of the new equipment on a loan with exactly the same terms as NatWest were offering, it didn’t in this instance. So I don’t think NatWest needs to do anything more to resolve this matter.

It’s now up to the directors of Company U to decide whether to accept the £400 offered by NatWest or not.

Final decision

For the reasons explained above I don’t uphold Company U’s complaint about National Westminster Bank Plc.

Under the rules of the Financial Ombudsman Service, I’m required to ask U to accept or reject my decision before 30 September 2020.