Not My De-Fault
Watchdog heard from customers from Virgin Media-O2 and Admiral Insurance who told us that negative markers or defaults were being wrongly added to their credit files. They added that they found out about these only when applying for mortgages.
They told us that these negative markers on their credit files have prevented them from obtaining competitive mortgage deals. They also said that the companies who have created their negative credit records have failed to promptly rectify these with credit reference agencies.
As a result of this, the defaults have stayed on customer’s credit files for much longer than needed.
One of these customers was Harry. Last year, he was offered a new mobile phone contract from Virgin Media, which recently merged with O2. He says he rejected the offer.
But in April, Harry had his application to re-mortgage his home rejected. This was due to “adverse credit”, caused by a default on his credit file from that very phone contract.
Harry believes there needs to be greater communication from companies so that customers can promptly rectify their accounts.
Watchdog heard from another customer in a similar situation; Mark, who was under pressure to secure a home for his family.
Earlier this year, he had the opportunity to buy the house him and his family had been renting for around 10 years. But before he could apply for a mortgage, Mark was told by his mortgage advisor that he had a default on his file, which would affect his chances of being approved.
Mark had to resort to the Financial Ombudsman, a service that settles complaints between consumers and businesses. The ombudsman upheld Mark’s complaint and the default was removed.
By law, consumers have the right to access this information on their credit reports, but many are not aware of this.
Watchdog also heard from Sarah Pennells, a consumer finance specialist who told us about research Royal London had carried out into the issue, and changes that the Financial Conduct Authority is proposing to address it.
She told us that Royal London Research found that one in three people had never seen their credit report. It also found that one in 12 people had a default or county court judgement registered against them that shouldn’t be there.
She added that the Financial Conduct Authority published a report which recommends that it should be easier for people to get hold of their credit report and crucially to correct their mistakes. She believes that these recommendations will improve the experiences of customers but they won’t be implemented in the next few months.
In relation to what Mark told us in the Watchdog item, a spokesperson from Admiral Insurance, told Watchdog:
“The policy should have been cancelled and backdated, however due to human error, the correct process wasn’t followed. The marker on Mark’s credit file for the missed payment should have also been removed at this point. We are very sorry for this mistake.
“However, we can confirm that they are no longer on there. Just to clarify, we have never been unwilling or unable to remove the markers, they were not removed sooner due to isolated cases of human error, and this has been corrected.
“Mark also raised a complaint with the Financial Ombudsman Service (FOS), and we have received their file. We would like to highlight that neither the impact to his credit rating nor his mortgage application was mentioned in either his complaint to us or to the FOS. We would be happy to discuss this matter with him if he would like to contact us.
“We accept that mistakes have been made with regards the renewal cancellation process and the removal of the markers on Mark’s credit file. We would like to offer our sincere apologies for this.
“We accept that by not taking steps to correct the information on the credit file at the first available opportunity, due to an oversight, we have not met the high standards of customer service we want to achieve. This has been corrected and the missed payments have been removed from Mark’s credit file.”
A Virgin Media O2 spokesperson told Watchdog:
“While we are unable to listen back to the initial phone call with Harry, the notes on his account suggest he did agree to the new package in July last year. When he called us in September to dispute this, we subsequently closed the account, but we should also have corrected his credit file at this point.
“We amended Harry’s credit file before Watchdog got in touch and have apologised to him for the delay he experienced. We have also offered £150 as a gesture of goodwill.”
An FCA spokesperson told Watchdog:
“Timely and accurate credit information provides vital insight into an individual’s financial standing and underpins decisions by retail lending firms. In our market study we proposed a suite of reforms to improve the market, including making it easier to dispute credit information and correct errors.
“We are continuing to engage with stakeholders in order to reform the sector and will publish a final report later this year.”
The FCA also told Watchdog that if consumers are concerned that there might be incorrect information on their file, they should contact the lender concerned or the credit reference agency. It added that there are clear guides on how to correct information available from the .
