Partially upheld: irresponsible lending - credit limit increase complaint against Nationwide Building Society
Financial Ombudsman decision DRN-6021027 of 2026-06-02T00:00:00+00:00. irresponsible lending - credit limit increase complaint against Nationwide Building Society. Outcome: Partially upheld.
Decision detail
| Reference | DRN-6021027 |
|---|---|
| Decision date | 2026-06-02T00:00:00+00:00 |
| Firm | Nationwide Building Society |
| Product | Credit card |
| Claim type | irresponsible lending - credit limit increase |
| Outcome | Partially upheld |
| Remedy | Nationwide must rework the account removing all interest, fees, charges and insurances applied to balances exceeding £1,950 after 13 May 2025. If this results in a credit balance, it must be refunded with 8% simple interest per year from the date of each overpayment. If a balance remains above £1,950, Nationwide must arrange an affordable repayment plan. All adverse information recorded after 13 May 2025 must be removed from Mr O's credit file once the balance is cleared or the rework is completed. |
Summary
Mr O complained that Nationwide lent to him irresponsibly by approving a credit card and subsequent credit limit increases he could not afford. The ombudsman found that the initial card approval in July 2024 and the first credit limit increase to £1,950 in October 2024 were fair lending decisions based on proportionate checks and Mr O's good account management. However, the second credit limit increase to £2,950 in May 2025 was upheld as unfair because Nationwide knew Mr O had just taken a £2,000 debt consolidation loan, was significantly overdrawn at £5,000, and his overdraft was in 'Repeat Use' status. The ombudsman directed Nationwide to remove all interest, fees and charges on balances exceeding £1,950 after 13 May 2025, refund any credit balance with interest, and remove adverse credit file information.
The Ombudsman's reasoning
Nationwide is required to conduct proportionate checks to ensure credit is affordable and sustainable, considering the impact of repayments on the borrower. While the initial approval and October 2024 increase were fair based on Mr O's good account management and promotional rate usage, the May 2025 increase was irresponsible. At that time, Nationwide knew Mr O had just taken a £2,000 consolidation loan, was significantly overdrawn at £5,000 (exceeding his income), and his overdraft was in 'Repeat Use' status. Increasing the credit limit by a further £1,000 in these circumstances would only have added to his indebtedness without proper consideration of his overall financial position. The fact that Mr O subsequently went into unarranged overdraft shortly after demonstrates the precarious nature of his finances.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Nationwide Building Society, all decisions | 13,230 | 21% |
| Credit card, all decisions | 25,211 | 22% |
Source
Read the original decision on the Financial Ombudsman Service website