Home Retail Group Card Services Limited · DRN-6193342

The complaint Miss C complains that Home Retail Group Card Services Limited trading as Argos Card (HRG) reported a late marker on her credit file after a Direct Debit payment failed. What happened In June 2025, HRG changed its reference numbers for collecting Direct Debit payments. It says it did this to provide additional security to its customers, and no action was required from customers or their banks as all other details remained unchanged. However, Miss C’s Direct Debit was returned unpaid by her bank in June 2025, which it later confirmed to be a result of the reference number change. Miss C says she wasn’t informed the payment had been missed and only became aware after seeing a late payment marker had been reported on her credit file. So she complained to HRG. In its final response, HRG said banks were sent new mandate forms and no action was required for the Direct Debit to be taken successfully as all other details remained the same. It said as it hadn’t made an error, it had correctly reported the missed payment to Miss C’s credit file and was required to do so. However, it accepted that Miss C wasn’t informed the payment had been missed, which contributed to the impact to her credit file. For this reason, it agreed to remove the missed payment from Miss C’s credit file and paid her £50 compensation. Still unhappy, Miss C referred her complaint to this Service. She said HRG should accept it made an administrative error when notifying her bank about the changes made and pay her more compensation for the impact caused. Our Investigator reviewed matters and was satisfied HRG had done enough to put things right for Miss C. They said the banks decision to reject the Direct Debit is something Miss C should raise with her bank directly. And HRG’s offer to remove the missed payment from Miss C’s credit file and pay her £50 compensation fairly reflected the impact caused by HRG not informing her of the missed payment. Miss C didn’t agree. In summary, she said HRG altered the Direct Debit reference and was therefore responsible for ensuring this didn’t result in avoidable payment failures. Since referring this complaint to this Service, further Direct Debit payments have been returned unpaid which she considers supports an ongoing administrative breakdown. The missed payment has had a lasting negative impact on her credit file, as the amendment hasn’t restored her credit score to what it was prior to this issue. And she doesn’t agree £50 fairly reflects the impact caused to her, which she considers goes beyond minor inconvenience. As no agreement has been reached, the matter has been passed to me to decide. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and

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reasonable in the circumstances of this complaint. In considering what is fair and reasonable, I’ve taken into account the relevant industry rules and guidance, and what would be considered as good industry practice. Having done so, I’ve reached the same overall conclusions as the Investigator, for broadly the same reasons. Firstly, I’d like to clarify I’ll only be considering the complaint Miss C raised with HRG in July 2025. Any complaints raised beyond this date are new issues that HRG must be given opportunity to address before this Service can get involved. This would include Miss C’s complaint about further Direct Debits failing from September 2025 onwards. It’s also important to explain I’ve read and taken into account all of the information provided by both parties, in reaching my decision. If I’ve not reflected on something that’s been said it’s not because I didn’t see it, it’s because I didn’t deem it relevant to the crux of the complaint. This isn’t intended as a discourtesy to either party, but merely to reflect my informal role in deciding what a reasonable outcome is. Where evidence has been incomplete or contradictory, I’ve reached my view on the balance of probabilities – what I think is most likely to have happened given the available evidence and wider circumstances. In its final response, HRG explained that Miss C’s June 2025 statement showed the payment being taken successfully on 16 June 2025, as it wasn’t returned unpaid until 22 June 2025, which was after the statement was produced. It accepted it didn’t alert Miss C via her mobile app that a payment had been missed due to the failed Direct Debit, so agreed to remove the missed payment from her credit file for this reason. That seems reasonable. Within its submission to this service, HRG explained Miss C wouldn’t have received notification via her mobile app in these circumstances, as they are only sent when a consumer has opted to receive them, and if the payment is not received on the account by the due date. As the Direct Debit payment had been credited to the account on the due date, in good faith that the funds would be released by her bank, this would’ve prevented the alert from being sent. HRG also explained it is a banks responsibility to advise consumers of any failed payments on their bank accounts – so Miss C’s bank should’ve notified her it had rejected the payment. Regardless of the above, I don’t think it’s unreasonable to expect HRG to have informed Miss C in some way that her payment had been missed due to the reversed Direct Debit. And had it done so, I’m persuaded Miss C would’ve taken prompt action to make the payment and prevent any adverse information being reported on her credit file. I say this because her bank has confirmed she had the available funds in her account to make the payment at the time. As such, I think HRG’s offer to remove the missed payment marker is a fair resolution in the circumstances. As HRG offered to pay compensation and remove the missed payment marker, this doesn’t appear to be disputed by it. What remains in dispute here is whether HRG were at fault for the Direct Debit being rejected in the first place, and if it’s done enough to put things right for Miss C – so this is what I’ve thought about. HRG has explained it changed the reference number for all Direct Debit payments to comply with the payment card industry (PCI) data security standard. HRG notified Miss C of this change in her May 2025 statement, with a prominent statement that said: “Starting in June 2025 (previously scheduled in February), we will implement system enhancements to provide additional protection for your card details. If you pay by Direct

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Debit, this will result in a change to the Direct Debit payment reference that you see on your bank statement. Your new reference will consist of a 15-digit number that ends with the last four digits of your card number. No action is required from you to continue making your payments via Direct Debit, and this change will not affect the service you receive in any way. Just so you know, the Direct Debit mandate you see with your bank will be displayed as a new mandate. As a result, for a short period, you may see two Direct Debits listed for us, your bank may notify you of the addition of the new mandate and the first payment collected using the new mandate may also include the wording ‘first payment’ in the reference but again, there is no action required from you.” A Direct Debit reference number is typically generated by the service user, in this case HRG, and appears on a customer’s bank statement to track and manage payments. As all other details remained unchanged, I wouldn’t generally expect a change in reference number to prevent an existing Direct Debit from being successfully taken from a customer’s bank. HRG has also confirmed this was a simple change with no requirement for a new mandate, so no action was required by Miss C’s bank in these circumstances. Miss C’s bank has confirmed the Direct Debit failed due to the different reference number used to what it held on the electronic mandate. But this isn’t enough for me to find HRG made an error. HRG says banks were sent new mandate forms. I haven’t seen what it sent to Miss C’s bank, but as the July and August 2025 Direct Debits successfully cleared following the reference change, I’m satisfied HRG did provide Miss C’s bank with the new reference which was subsequently accepted. I haven’t seen when HRG notified Miss C’s bank of the change. But even if I was to find HRG could’ve done more to prevent a payment from being rejected, I need to consider what it has already done to resolve matters for Miss C. This Service is not the regulator, so it’s not my role to punish or fine a business where something goes wrong. Any award I make would aim to reflect the impact the issue had on Miss C. Here, the impact to Miss C was a missed payment being applied to her credit file – which HRG has already removed. So regardless of who is at fault for the Direct Debit being rejected, the impact of this has already been rectified by HRG. I don’t dispute adverse information being reported on her credit file would’ve caused distress and inconvenience to Miss C. But I’m also satisfied this was resolved by HRG in a timely manner, minimising the impact caused. So, having carefully considered the overall circumstances of this complaint, I’m satisfied the £50 compensation HRG paid fairly reflected the short-term impact caused. I haven’t seen any evidence that the matter has resulted in financial loss. Miss C says it prevented her from proceeding with a mortgage application, as she was advised by a broker not to apply. Miss C was unable to provide any evidence of this, and as she didn’t apply for any lending, there is no way of knowing what the outcome of an application would’ve been, or what any lending decision would’ve been based on. I can understand Miss C’s reluctance to apply with a missed payment showing on her credit file, but I also haven’t seen that she applied for a mortgage once the adverse information had been removed. Miss C told this Service she later chose not to apply, so I can’t reasonably find HRG were solely responsible for Miss C not obtaining a mortgage at the time. Miss C says the issue has resulted in a permanent reduction to her credit score, so the removal of the missed payment hasn’t fully rectified the impact caused. However, a credit score itself is simply a figure based on an algorithm using the data on the credit file. Each Credit Reference Agency (CRA) has its own algorithm based on the criteria it thinks is

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important. It’s not unusual for the score to fluctuate regularly for various reasons – an example, among other things, being credit account balances or the percentage of available credit being used on the day the score is generated. As such there could be several other reasons as to why Miss C’s credit score fluctuated and not something I can hold HRG responsible for. In any case, it may be helpful to explain Miss C’ credit score will only be visible to her, it’s a general indication which helps customers get a simple view of how their credit file might be perceived by lenders. But individual lenders cannot see this number, they can only see the data showing on the credit file. Each lender will use the data from CRAs to assess a credit application in line with their own internal lending criteria which they base their lending decisions on. Overall, I haven’t seen enough evidence to persuade me it’s more likely than not that HRG made an error when amending the reference number on Miss C’s Direct Debit. And even if it did, I’m satisfied what HRG has done to put things right fairly reflects the impact the failed Direct Debit in June 2025 caused to Miss C – so I don’t require it to do anything further. As mentioned above, Miss C may wish to contact HRG and/or her bank regarding the failed Direct Debits from September 2025, so this can be further investigated. My final decision For the reasons explained, my final decision is that I don’t uphold Miss C’s complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss C to accept or reject my decision before 27 April 2026. Nicola Bastin Ombudsman

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