Upheld: irresponsible lending - failure to conduct proportionate affordability checks and failure to monitor overdraft usage complaint against Nationwide Building Society
Financial Ombudsman decision DRN-5973960 of 2026-05-07T00:00:00+00:00. irresponsible lending - failure to conduct proportionate affordability checks and failure to monitor overdraft usage complaint against Nationwide Building Society. Outcome: Upheld.
Decision detail
| Reference | DRN-5973960 |
|---|---|
| Decision date | 2026-05-07T00:00:00+00:00 |
| Firm | Nationwide Building Society |
| Product | Overdraft |
| Claim type | irresponsible lending - failure to conduct proportionate affordability checks and failure to monitor overdraft usage |
| Outcome | Upheld |
| Remedy | Nationwide Building Society must: (1) Re-work Mrs C's account to remove all interest, fees and charges applied from 31 July 2020 onwards; (2) If an outstanding balance remains after adjustments, contact Mrs C to arrange a suitable repayment plan and may record negative information on her credit file backdated to 31 July 2020; OR (3) If removing charges results in no outstanding balance, treat any excess as overpayments and return to Mrs C with 8% simple interest from the date made until settlement, and remove any adverse information from her credit file. Nationwide must provide a tax certificate if requested. |
Summary
Mrs C complained that Nationwide Building Society lent to her irresponsibly by approving multiple overdraft limit increases between October 2018 and November 2024. The FOS investigator upheld the complaint in part, finding that Nationwide failed to evidence reasonable and proportionate checks prior to OLI 4 in July 2020. The ombudsman upheld the complaint, finding that Mrs C's account displayed clear signs of financial difficulty, with the account overdrawn in every month of the preceding 12 months and remaining overdrawn even upon receipt of salary. Nationwide failed to appropriately monitor the overdraft usage or intervene in line with its regulatory obligations under CONC. The ombudsman ordered Nationwide to remove all interest, fees and charges from 31 July 2020 onwards and arrange appropriate remedies depending on whether an outstanding balance remains.
The Ombudsman's reasoning
The ombudsman found that Nationwide failed to conduct proportionate checks before approving OLI 4. Although the firm considered income and external debt, it did not conduct a sufficiently forensic analysis of how Mrs C was managing the account. The account ledgers revealed a clear pattern of hardcore borrowing with the account overdrawn in every month of the relevant 12-month period, remaining overdrawn even upon receipt of salary, and only holding a credit balance for approximately 38 days total. This pattern constitutes signs of actual or potential financial difficulties under CONC 6.7.2R. The ombudsman concluded that Nationwide should have intervened, provided forbearance, and taken active measures to enable Mrs C to reduce her overdraft debt rather than approving further increases. The firm's obligation to monitor overdraft usage and ensure it was being used appropriately was not met.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Nationwide Building Society, all decisions | 13,251 | 21% |
| Overdraft, all decisions | 3,791 | 24% |
Source
Read the original decision on the Financial Ombudsman Service website