Bank sent incorrect information to debt collector

Categories:

Service problems, Lending,

Summary:

Liam complained that the bank sent incorrect information to a debt collector, which resulted in debt collection letters being sent to his previous addresses in mid-2025 about a debt that had been resolved. The bank accepted its mistake and offered $500. Liam did not accept the offer, saying the letters had damaged his reputation, caused him to lose work, and caused significant stress. He sought $7,500 from the bank. When the bank rejected this request, he asked us to investigate.

Published:

March 2026

Our investigation

We considered whether the damage, losses and stress Liam described could be directly linked to the bank’s error. Liam’s company had been liquidated shortly before the letters were sent. The liquidator’s first report showed the business had stopped trading in December 2024 and had unpaid debts. This was publicly available information. The resolved debt related to a vehicle that was repossessed in July 2024 after the repossession agent visited the same addresses later used by the debt collector. This meant some of the matters raised with him might not have been caused by the debt collector letters.

Compensation is intended to put a customer back in the position he or she would have been in if the bank had not made a mistake. To award compensation, we need evidence that a bank’s error directly caused the consequences claimed by the customer. In Liam’s case we had none. We told Liam that, in our view, the bank's offer seemed fair and reasonable.