Barclays Bank UK PLC · DRN-5881018

The complaint A company, which I’ll refer to as O, complains that Barclays Bank UK PLC (Barclays) failed to provide appropriate support when it began experiencing financial difficulties. O says Barclays’ lack of support meant it had to cease trading. O’s director, Mrs P, brings the complaint on the company’s behalf. However, she is represented by her husband, Mr P with whom the bank had mainly dealt during these events. What happened Mr P has told us: • In 2019, O took out a £70,000 Business Flexi Loan (the Loan) with Barclays. • In 2022, O experienced financial difficulties and despite attempts to support it through the injection of personal funds, and earlier in 2020 a separate Government loan (BBL) via Barclays O’s financial position remained largely unchanged. So, he asked Barclays for help, including restructuring or consolidating the loans so that O could continue trading. Barclays, however, declined to help. They told him O needed to default on its repayments to initiate a conversation about any help that might be available. • In January 2023, he informed Barclays that in March 2023, O would be closing down. Later, he had further discussions with Barclays – including requesting the transfer of repayment responsibility for the Loan from O to both he and Mrs P jointly. But the bank didn’t do so. • In March 2023, O ceased trading and later defaulted on its Loan repayments. However, O would not have found itself in that position if Barclays had provided the support, it was looking for all along. Barclays is now seeking to recover the outstanding £38,000 balance on the Loan, notwithstanding O is no longer trading. Given the circumstances, and Barclays’ conduct, they should write off the Loan. Barclays told us: • Mr P confirmed, O would cease trading in March 2023 and asked about loan restructuring. But given O’s intention to cease trading, O was told the bank couldn’t help until O’s liquidator got in touch. It wasn’t the bank’s intention to suggest O needed to default on its loan repayments to trigger conversations with its Business in Financial Difficulty team. • In any event, where there’s a clear intention to close a business, to avoid the risk of the borrowing becoming unguaranteed, the appropriate bank process which was observed in this case was to follow the Collections and Recoveries journey. • It didn’t explain it couldn’t consolidate O’s borrowings without invalidating the Government-backed guarantee on O’s other loan – BBL which it had taken out in 2020. In acknowledgement of its error the bank offered O £200 in compensation.

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Barclays’ offer did not resolve O’s complaint, so, it was referred to this service to look into. Our investigator concluded the £200 compensation Barclays offered O in acknowledgement of their error was a fair way of settling the complaint. Beyond that, she didn’t think Barclays needed to do anything more. She said she found no evidence the bank advised O to default on its loan repayments to initiate a conversation about the help the bank would be willing to provide. And she was satisfied Barclays considered all factors relevant to O’s circumstances. Including O’s decision to cease trading, meaning it would no longer generate an income. She concluded that the most appropriate solution for O was for Barclays to place the Loan into Collections and later Recovery. Barclays accepted the investigator’s conclusions. However, O didn’t. Mr P wrote with further detailed submissions on its behalf. In summary, Mr P said: - Had Barclays engaged with O professionally and empathetically at the outset – including exploring the restructure of the Loan to facilitate more affordable monthly outgoings, O would have remained viable. - O defaulted on its repayments as Barclays advised. But the advice contravened FCA principles guaranteeing fair treatment of customers. Furthermore, case law supports the proposition that Barclays may be held liable for the consequence of poor advice - not least in circumstances where a customer’s reliance on that advice is reasonably foreseeable and leads to foreseeable damage. 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. Where the evidence is incomplete or inconclusive (as indeed some of it is here) I reach my decision on the balance of probabilities – in other words, what I consider is most likely to have happened in the light of the available evidence and the wider circumstances. When faced with financial difficulties, I’d expect a company to contact its bank to make it aware of those difficulties. For their part, banks are under an obligation to treat their customers fairly. To that end, when it comes to financial difficulties, they are expected to consider their customer’s situation and needs positively and sympathetically as well as what arrangements might be appropriate to help. O’s dealings with Barclays in 2022 Mr P has told us O’s difficulties became acute in 2022. I don’t doubt that he tried engaging with Barclays from that point. Barclays told us there’s no mention of loan consolidation in their internal records except in 2023 when Mr P called them. However, the bank acknowledges that is not to say conversations didn’t happen. In any case, I understand much of Mr P’s dealings with the bank at the time was via mobile phone discussions with O’s relationship manager. I don’t have a record of the calls. It’s unlikely they were recorded in any event. Having approached the bank for help, Mr P expected Barclays to offer support to O. And we would expect Barclays to consider appropriate support following a review of O’s financial position. Mr P has given detailed information about O’s financial position at the time. He explained both he and Mrs P were unable to turn O’s fortunes around despite cash injection of around

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£40,000 from personal resources. He’d approached Barclays hoping to restructure the Loan and extend the term so that repayments would become more affordable. I’ve found no clear evidence Barclays offered any help at this point. Barclays have told us their options for customers in financial difficulties is to offer short term help which is designed to assist the customer overcome a short-term financial difficulty. So, even if Barclays had offered O support, I cannot see how its financial situation would have been improved in the short term or at all. I say that because Mr P has told us in addition to the cash injection mentioned above, O also made efforts to reduce overheads, tightly manage its costs, including removing commission and incentives for its employees. Despite these measures, however, unfortunately O did not return to profitability. Mr P told us O also engaged professional advisers to assess the business and investigate its options. But despite this, O’s accountant’s overall assessment was that it had “run out of rope” and destined to make month-on-month losses. Against that background, it is difficult to conclude if O had received the requested support from Barclays in respect of its refinancing proposal, O would have been able to recover in the short term if at all. Rather, I agree with Mr P’s, initial submission to us which was that O may only have been able to delay the difficult decision to cease trading. O’s dealings with Barclays in early 2023 Barclays records show there were conversations between the bank and Mr P on 14 February, 7 and 21 March 2023. Although there were subsequent calls to the bank, I regard these as the most critical ones. I say that because they took place before O ceased trading and Mr P was reaching out to the bank for help in advance of that occurrence. Barclays were unable to provide the 14 February 2023 call recording because they say, the period for retaining it has passed. I have, however seen a brief note of the call which simply said: “Mr [P] called and stated that business will cease trading on the 31 March 2023” But I’ve listened to both the calls that took place on 7 and 21 March 2023. On balance, despite the brevity of the 14 February note, I’m satisfied the nature of the conversations between the bank and Mr P in February as well as in March 2023 were broadly the same. In the 7 March 2023 call to the bank Mr P began by explaining O was closing down and staff members were being made redundant. He further explained O was looking to close its accounts with the bank, rearrange the direct debits so that rather than O continuing to be responsible for repayments on the Loan going forward, he and Mrs P would personally assume such responsibility through changes to the direct debits. Although I’m satisfied all the conversations Mr P had with the bank at the time happened against the background of O’s continued financial difficulties, I’ve not been persuaded Mr P asked Barclays for assistance on behalf of O to help it stay afloat. In any event, by 31 March 2023, O was on course to cease trading. Steps had already begun in that direction through making staff members redundant. By this point with no future income in prospect, I don’t think a reconstruction of the Loan was likely to be the best outcome for O. Moreover, consolidating the Loan and BBL as Mr P suggested would have invalidated Barclays’ security for the Loan in the form of the personal guarantee given by Mr and Mrs P. To summarise. Based on the conversations between the bank and Mr P in March 2023, I’m satisfied that Mr P was looking to remove O from responsibility for future repayments of the

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Loan. This did not happen in part because, a mismatch in the signatures presented to the bank in connection with the direct debit changes couldn’t be resolved. On the central point of O’s complaint, however, I can’t fairly conclude Mr P’s dealings with the bank in February and March 2023 caused O to cease trading. Rather the evidence shows by that time the decision had already been taken. advice to default repayments on the Loan I’m aware this has been an important aspect of O’s complaint against Barclays. And like the investigator, I’ve found no clear evidence from the calls I’ve listened to, Mr P was advised O needed to default on the Loan. But I acknowledge Mr P interpreted things that way. So, I thought about what Mr P has told us was the consequence for O of that advice. Mr P submitted in effect that Barclays might on the basis of case law be held liable for the foreseeable harm caused by the advice. Mr P explained: “The very reason we were forced to close our business was not merely a lack of support from Barclays in respect of refinancing, but the direct result of advice from Barclays to default on our loan”. However, I am satisfied O ceased trading because of challenging trading conditions as Mr P acknowledged. And whilst the bank did not offer the help O was looking for, for the reasons already explained, I’m not persuaded this would in the circumstances have been in O’s best interest. Putting things right Barclays’ offer of compensation I agree in one respect the service Barclays provided to O was poor. More specifically in relation to Mr P’s request to consolidate the Loan with the BBL. Barclays failed to explain it was not possible to do so as it would compromise the government guarantee on the BBL. But I don’t think the impact of the error was significant. I agree with the investigator, the £200 Barclays has offered fairly reflects the impact of the inconvenience this caused to O. My final decision My final decision is I uphold this complaint in part. In full and final settlement of it, I require Barclays Bank UK PLC to pay £200 compensation for the inconvenience caused to O by their poor service. Under the rules of the Financial Ombudsman Service, I’m required to ask O to accept or reject my decision before 24 April 2026. Asher Gordon Ombudsman

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