Paula missed bill payments when her e-money account was frozen

Banking Covid-19

Paula depended on benefit payments in an e-money account. When her account was frozen due to problems with a third-party service, Covid-19 disruption meant she struggled to get clarity from her e-money provider – missing bills in the meantime. We told the provider to increase the compensation it had offered, refund charges Paula had incurred for missed payments, and ensure her credit file wasn’t affected.

What happened

Paula contacted us when she couldn’t access the electronic money account she was relying on for essential living expenses.

Paula told us she had a serious illness, and received a limited income from the Department for Work and Pensions (DWP). She said this was paid into her e-money account on a certain day each month, and she would then transfer it to a bank account from which she paid the majority of her direct debits and day-to-day expenses.

Paula explained that her most recent monthly bank transfer hadn’t happened as it usually would. She’d contacted the e-money provider, but had struggled to get through to talk about her concerns because of its reduced operating hours due to Covid-19.

Paula said she’d eventually been told that the issue was down to a third-party service linked to the e-money account being subject to Financial Conduct Authority (FCA) restrictions. After a week of trying to resolve things, she’d finally managed to make the transfer – but had missed a number of bill payments. The e-money provider had offered her £25 in compensation for the inconvenience.

Paula was unhappy with this outcome. She said she’d been extremely concerned she’d run out of money and wouldn’t be able to attend hospital if she’d needed to. She said she was also caring for her mother, and her father had recently died from Covid-19 – so the trouble accessing her money had come at an extremely difficult time. She asked if we could help resolve her complaint.

What we said

We established that, at the time Paula’s account had been frozen, the FCA had put a number of restrictions on a third party involved in facilitating the e-money account. It was this that had caused the issues with transferring money out of Paula’s account.

Looking at the records, we could see that when Paula had called the e-money provider, she’d been incorrectly told that she’d entered the wrong card details. She’d then been told there was no known issue with her bank transfer, and that it was being processed. It wasn’t until the next day that the e-money provider contacted Paula to explain the FCA action meant accounts were currently inaccessible.

The e-money provider said it hadn’t known about this action when Paula first contacted its helpline. And this was why it hadn’t put in place any contingency plans to reduce the impact on its customers.

We acknowledged the pressure the e-money provider’s helpline had been under due to the pandemic. And we didn’t doubt that the information Paula was given in the first instance had been to the best of the helpline adviser’s knowledge at that time. We also recognised that a lot of the distress Paula had been experiencing wasn’t caused by the issue with the transfer.

However, the e-money provider had a duty to give Paula access to her money. If Paula had had access to her funds, she wouldn’t have had the worry associated with that. And because of her circumstances, it was likely the impact on her had been more significant than for other customers who weren’t reliant on that income, caring for a parent and recently bereaved.

In light of everything we’d seen, we decided the e-money provider needed to do more to put things right, and told it to pay Paula additional compensation. We also told it to refund Paula any fees and charges she’d incurred as a result of missing bill payments, and to provide her with a letter she could present to creditors to ensure her credit file wasn’t affected by what had happened.