Start Up Loan1. The FOS Coverage Gap
The Financial Ombudsman Service is the UK's free, independent service for resolving disputes between consumers and financial businesses. Most personal finance products — credit cards, personal loans, mortgages — are covered by FOS. If your lender treats you unfairly, you can escalate to FOS and receive an independent decision.
Start Up Loans are different. Because they are classified as business loans — even when held in a personal name — they fall outside FOS jurisdiction for individual borrowers.
What this means in practice
- If you have a dispute with your lender, you cannot escalate to FOS for an independent ruling
- Your lender knows this, and it affects the balance of power in any dispute
- Many borrowers — and even some lender colleagues — are unaware of this limitation
What you can do instead: There are still routes available to you. See Your Routes If Things Go Wrong for a full breakdown including small claims court, FCA oversight complaints, and MP escalation.
2. Your Rights as a Vulnerable Customer
The Financial Conduct Authority's Consumer Duty rules, which came fully into force in 2023, require FCA regulated firms to deliver good outcomes for all customers — with particular attention to vulnerable customers.
You may be considered a vulnerable customer if you have:
- A mental health condition such as anxiety, depression, ADHD, or similar
- A physical health condition affecting your ability to manage finances
- Recently experienced a significant life event such as bereavement, job loss, or relationship breakdown
- Low financial resilience or literacy
What firms are required to do
- Proactively identify vulnerability — they should not wait for you to raise it
- Record vulnerability on your account and act on it
- Adapt their communication and processes to meet your needs
- Consider the impact of their actions on your health and wellbeing
What firms frequently fail to do
- Check vulnerability status before communicating with a customer
- Follow recorded communication preferences
- Consider the impact of letters, demands, or defaults on a vulnerable person's mental health
If a firm has failed to meet these obligations in your case, this is a basis for complaint and potentially an FCA oversight complaint. See Your Routes If Things Go Wrong.
3. Default Notices — Your Rights
A default is a serious mark on your credit file. Before a lender can register a default, they are legally required to:
- Send you a formal default notice giving you at least 14 days to remedy the situation
- Have made reasonable attempts to contact you prior to issuing the notice
- Have followed their own arrears and forbearance procedures
If you were defaulted without proper notice, or after a long period of no contact from your lender, you may have grounds to challenge that default. A successfully challenged default can be removed from your credit file entirely.
If you work in financial services
A default on your credit file can put your employment at risk. FCA regulated roles often require individuals to maintain satisfactory financial standing. If a default was applied incorrectly or without proper process, the consequences for your career make the case for challenge even more compelling.
See Were You Suddenly Defaulted? for detailed guidance on challenging a default.
4. Subject Access Requests
A Subject Access Request (SAR) is your legal right under UK GDPR to request all personal data a company holds about you.
Submitting a SAR to your lender can reveal:
- What vulnerability flags are recorded on your account
- What communication preferences are logged
- Internal notes and records about your account history
- Whether processes were followed correctly
A SAR is free to submit and the company must respond within 30 days. It is one of the most powerful tools available to borrowers and is often overlooked.
How to submit one
Write to your lender's Data Protection Officer stating clearly that you are submitting a Subject Access Request and requesting all personal data held about you. Keep a copy of everything you send and everything you receive.
Tip: Send your SAR by email and request a read receipt. This creates a clear record of when it was submitted and gives you a timestamp if there is any dispute about the response deadline.