DRN-6296325

The complaint Mr S is unhappy that Bank of Scotland plc (“BOS”) placed an unnecessary barrier in the way of him obtaining a Pay As You Grow (“PAYG”) option on his Bounce Back Loan (“BBL”), and he believes this caused the loan to accrue arrears and amounted to a breach of contract. What happened Mr S took out a Bounce Back Loan with Bank of Scotland in May 2020 for £14,000. Over time, he experienced financial difficulty and made use of various support options, including PAYG payment holidays. In late 2024, Mr S contacted BOS to ask to take a further PAYG option on his Bounce Back Loan. On 1 November 2024, BOS told Mr S that they couldn’t proceed with his PAYG request unless his relationship manager first provided approval. Mr S wasn’t happy about this as he didn’t believe that speaking to his relationship manager was a requirement of the BBL terms, and he felt that the requirement caused an unnecessary delay at a time when he was already under financial pressure. Because of the requirement, Mr S was unable to put the PAYG arrangement in place immediately. BOS’s internal notes show that Mr S’s relationship manager did later give their authority for a further PAYG option, and BOS were in a position to proceed with it by late December 2024. This meant there was a delay of around seven weeks between Mr S’s initial request and BOS being able to process the PAYG arrangement. During this period, a Bounce Back Loan repayment due in November 2024, for the sum of £173.22, but was missed by Mr S and became outstanding. Mr S wasn’t happy about what had happened, so he raised a complaint and said that BOS had acted in breach of their contract with him regarding the BBL. BOS responded to Mr S and accepted that the service he’d received had fallen short and that requiring him to go through his relationship manager had caused avoidable delay. BOS apologised to Mr S for this but didn’t feel that what had happened warranted any payment of compensation to him. And BOS also didn’t agree that their actions had amounted to a breach of contract or that it justified writing off the Bounce Back Loan. Mr S wasn’t satisfied with BOS’s response, so he referred his complaint to this service. One of our investigators looked at this complaint. They felt that BOS had acted unfairly towards Mr S by creating a barrier to his obtaining a PAYG arrangement that wasn’t required by the BBL terms and said that BOS should pay £250 to Mr S as compensation for this. But our investigator didn’t feel that Mr S’s request that the full balance of the BBL at that time should be written off, as Mr S was requesting, or that any further action from BOS was fairly merited. Mr S didn’t accept the view put forward by our investigator, so the matter was escalated to an ombudsman for 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

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in the circumstances of this complaint. I issued a provisional decision on this complaint on 1 April 2026 as follows: Before explaining my decision, I need to be clear about the scope of what I’ve considered in this review. This service can only consider points of complaint that have previously been raised directly with the respondent business, such that the business has had a formal opportunity to consider those points of complaint and respond to them. As such, this decision deals only with the complaint that Mr S first raised with BOS and which was addressed by them in their final response letters. That complaint relates to the delay and confusion Mr S experienced when he tried to arrange a PAYG option on his Bounce Back Loan in November 2024. Mr S has raised several additional concerns during the time his complaint has been with this service. But those issues are not points that I can consider, for the reason explained above. As such, if Mr S wants to pursue these further complaint points, I can only refer him to BOS to raise those points with them directly in the first instance, so that BOS have the formal opportunity to consider them. After BOS have had such an opportunity, it may be the case that Mr S has the right to refer those points to this service, should he still wish to do so at that time. I also note that Mr S, in his submissions to this service, has raised several points of a legal or regulatory nature, including that Mr S believes that BOS acted in breach of contract and that this breach entitles him to have the Bounce Back Loan written off. It’s therefore important to confirm that this service isn’t a court of law of regulatory body and doesn’t act as such. This means that I have neither the remit nor the authority to determine whether a business has breached a contract as a court might. Only a court of law can make a formal finding that a contract has been breached, and if Mr S wants a decision of that type he will need to obtain one from a court of law. Our role is different: we look impartially at what is fair and reasonable in all the circumstances of a complaint and decide what corrective action, if anything, the business needs to do to put things right. Mr S contacted BOS on 1 November 2024 to ask for a further PAYG option. BOS told him they could not proceed unless his relationship manager approved it first. The Bounce Back Loan terms did not require this, and based on the evidence I’ve seen, I feel that BOS acted unfairly by putting this unnecessary additional barrier in place. As a result, there was a delay of around seven weeks before BOS were in a position to process the PAYG request, as Mr S’s relationship manager did not authorise the request until 23 December 2024. This delay should not have occurred, and I feel that it caused Mr S some avoidable frustration and inconvenience, particularly given his financial circumstances at the time. Mr S asked for the full balance of his Bounce Back Loan, which it’s my understanding amounted to several thousand pounds, to be written off because of BOS’s handling of his PAYG request. I’m not persuaded that that request is reasonable or proportionate. The delay in arranging the PAYG led to the accrual of some arrears with Mr S later cleared, alongside the inconvenience and frustration previously mentioned. In such a scenario I’m satisfied that a modest payment of compensation represents a fair outcome, and I feel that writing off the loan balance as Mr S would like would be clearly disproportionate and would be a remedy far beyond the impact of BOS’s failing. All of which means that I’ll be provisionally upholding this complaint and instructing BOS to pay £250 to Mr S as compensation for the impact of their unnecessarily delaying his PAYG

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request on him. In arriving at this compensation amount I’ve considered the trouble and upset that Mr S incurred alongside the general framework this service uses when assessing compensation amounts, details of which can be found on this service’s website. And, having done so, I feel that £250 is a fair compensation amount. Finally, because the position taken here is that BOS should have set up the PAYG holiday when Mr S first requested it, the November payment should have been covered by that holiday and should not have been required to have been paid by Mr S. Because of this, BOS must also amend Mr S’s credit file reporting to show that payment as not being missed or late. This instruction was not given by our investigator in their view of this complaint, and this contributes towards my issuing this decision on a provisional basis, to give all parties the opportunity to respond to this new requirement. *** BOS responded to my provisional decision and confirmed that they were in acceptance of it. Mr S did not respond to my provisional decision and therefore raised no objection to it. As such, I see no reason not to issue a final decision here whereby I uphold this complaint on the basis described in my provisional decision. And I hereby confirm that my final decision is that I do uphold this complaint in Mr S’s favour on that basis accordingly. Putting things right BOS must pay £250 to Mr S. BOS must also amend their credit file reporting so that the November payment does not show as being missed or late. My final decision My final decision is that I uphold this complaint against Bank of Scotland plc on the basis explained above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr S to accept or reject my decision before 14 May 2026. Paul Cooper Ombudsman

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