Not upheld: unfair lending relationship and overdraft charges complaint against National Westminster Bank Public Limited Company (NatWest)

Decision detail

Summary

Mr T complained to NatWest in August 2025 about overdraft charges applied to his current account over an extended period, arguing that NatWest should have recognised he was in financial difficulty and ceased charging him. NatWest rejected the complaint, and Mr T referred the matter to the Financial Ombudsman Service. The ombudsman interpreted the complaint as an allegation that the lending relationship was unfair under section 140A of the Consumer Credit Act 1974. After examining Mr T's account statements, transaction history, income, and expenditure, the ombudsman found no obvious indicators of financial difficulty as defined by FCA guidance, evidence that Mr T had sufficient income to clear his overdraft, and that he periodically returned to credit balances. The ombudsman concluded that Mr T appeared to be choosing to use the overdraft rather than being reliant on it, and therefore NatWest was reasonably entitled to continue applying charges. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied section 140A of the Consumer Credit Act 1974 to assess whether the lending relationship was unfair. The key finding was that while prolonged overdraft usage can indicate financial difficulty, it does not automatically mean a customer is in difficulty. The ombudsman examined whether NatWest ought reasonably to have realised the facility was unsustainable or harmful. Finding no obvious indicators of financial difficulty per FCA guidance, no evidence of borrowing from unsustainable sources, and evidence that Mr T had sufficient income to clear the overdraft and did return to credit balances, the ombudsman concluded Mr T appeared to be choosing to use the overdraft rather than being reliant on it. Therefore, NatWest was reasonably entitled to continue applying charges.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website