Upheld: irresponsible lending, unfair overdraft charges, failure to intervene in repeat overdraft use complaint against Santander
Financial Ombudsman decision DRN-6038847 of 2026-05-21T00:00:00+00:00. irresponsible lending, unfair overdraft charges, failure to intervene in repeat overdraft use complaint against Santander. Outcome: Upheld.
Decision detail
| Reference | DRN-6038847 |
|---|---|
| Decision date | 2026-05-21T00:00:00+00:00 |
| Firm | Santander |
| Product | Overdraft |
| Claim type | irresponsible lending, unfair overdraft charges, failure to intervene in repeat overdraft use |
| Outcome | Upheld |
| Remedy | Santander must: (1) Rework Miss S's overdraft balance removing all interest, fees and charges from January 2022 onwards; (2) If a balance remains, contact Miss S to arrange a suitable repayment plan and adjust credit file records to reflect what would have been recorded had corrective action started in January 2022; (3) If the account was sold to a debt purchaser, buy it back, pay the purchaser to make adjustments, or pay Miss S to ensure full compliance; (4) If removing charges results in no outstanding balance, treat the excess as overpayments and return to Miss S with 8% simple interest per year from the date charges were made, and remove all adverse credit file information. |
Summary
Miss S complained that Santander should refund all overdraft charges over six years because she was in financial difficulty. Miss S, a single parent with reduced income since 2019 and a neurological condition, had £28,000 debt and relied on her overdraft for daily expenses, unable to break the cycle due to high charges. Santander's December 2021 review should have revealed Miss S was in financial difficulty with repeat overdraft use and insufficient income to clear the balance, yet Santander continued charging her without taking appropriate intervention steps required by FCA rules. The ombudsman upheld the complaint, finding Santander failed to intervene proportionately and should refund all charges from January 2022 onwards, arrange a repayment plan, and adjust credit file records accordingly.
The Ombudsman's reasoning
The ombudsman found that by December 2021, Miss S was in clear financial difficulty and engaging in 'hardcore borrowing' - her account showed no maintained credit balance and incoming credits were insufficient to clear the overdraft. Santander's own communications demonstrated it knew Miss S was misusing the overdraft. Under CONC 5D.3.2, Santander was required to take reasonable steps to contact Miss S to discuss her situation and explain potential consequences including suspension or reduction of the facility. Santander failed to do this adequately and instead continued charging interest and fees, adding to Miss S's financial problems. The ombudsman rejected Santander's argument that taking action would cause financial hardship, noting Miss S was already in financial difficulty and needed help, not further charges.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Santander, all decisions | 5 | 20% |
| Overdraft, all decisions | 3,791 | 24% |
Source
Read the original decision on the Financial Ombudsman Service website