Not upheld: Irresponsible lending complaint against Norwich Trust Limited

Decision detail

Summary

Ms Z complained that Norwich Trust Limited irresponsibly lent her £20,000 over 10 years without adequately assessing her circumstances, claiming she was already under financial strain and had undisclosed monthly nursery costs of £1,000. She also alleged NT failed to ensure she used the loan to settle existing debts and that she felt pressured into the loan without clear terms. NT maintained it conducted proportionate affordability checks showing Ms Z could afford the loan. The ombudsman found NT's checks were proportionate, based on actual income and verified expenditure, and that NT reasonably calculated disposable income of £2,413.67 after the new repayment. The ombudsman rejected Ms Z's claims about undisclosed costs, noting they did not appear in banking data and she had stated no dependents were resident. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that NT's checks were proportionate given the circumstances: they were based on actual income and fixed expenses rather than declarations or averages, and NT verified the assessment through a direct call with Ms Z. The checks showed Ms Z had sufficient disposable income (£2,413.67) to afford the £397.16 monthly repayment. While Ms Z claimed to be struggling financially, the credit check showed no adverse data, all accounts up-to-date, and no overdraft usage. The ombudsman noted that NT could not reasonably be expected to know about undisclosed nursery costs not appearing in banking data, and that Ms Z's statement of no dependents meant NT had no reason to investigate such costs. The loan was primarily for debt consolidation, and NT was reasonably entitled to rely on Ms Z's assurances that she would use the funds to clear existing debts. The ombudsman found no evidence of pressure during the application process and confirmed the terms and conditions were clearly communicated.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website