Not upheld: irresponsible lending and unfair account management complaint against Lloyds Bank PLC

Decision detail

Summary

Miss F complained that Lloyds irresponsibly granted her an overdraft in September 2022 (initially £600, increased to £1,000) and failed to help her exit it despite prolonged reliance. Lloyds conducted affordability checks showing Miss F had declared income of £1,036 monthly with essential costs of £576, leaving approximately £460 disposable income. Although Miss F experienced some returned payments, her salary generally restored her account to credit and she managed within the limit. The ombudsman found Lloyds' initial checks were proportionate, the facility remained affordable throughout the period reviewed, and Lloyds provided appropriate ongoing monitoring and support. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the regulatory requirement that lenders must carry out proportionate affordability checks and consider whether customers can repay sustainably. At the time of the £1,000 limit approval in September 2022, Lloyds' checks were proportionate given the amount borrowed and Miss F's circumstances. With declared income of £1,036 and essential costs of £576 (£456 + £120), Miss F had approximately £460 disposable income monthly, sufficient to repay a £1,000 overdraft within a reasonable period. Although Miss F experienced some payment difficulties, her salary generally restored her account to credit and she managed within the limit. Lloyds' ongoing monitoring and support communications were appropriate. By 2024, Miss F's income had increased, making the facility even more affordable. The interest rate increase was permitted under standard account terms with adequate notice.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website