Not upheld: irresponsible lending, failure to provide forbearance and support complaint against Lloyds Bank PLC

Decision detail

Summary

O, a company incorporated in 2013, complained that Lloyds Bank PLC lent irresponsibly by granting a £15,000 overdraft with no trading history, increasing it to £25,000 in 2016, and providing a £30,000 Bounce Back Loan in 2020, without adequate support during financial difficulty. Mr G, O's director, also claimed he sold his home based on a mistaken belief that a personal guarantee was in place. The ombudsman found most complaints outside jurisdiction due to the six-year time limit, rejected the irresponsible lending claim as Lloyds conducted affordability reviews and had no evidence of distress until 2024, and separated the personal guarantee complaint as it related to Mr G individually rather than O. The ombudsman upheld only the failure to offer forbearance in April 2025 when financial difficulty was clearly communicated, awarding £250 compensation.

The Ombudsman's reasoning

The ombudsman applied strict jurisdictional rules under DISP 2.8.2R, finding that complaints about the initial overdraft grant (2013) and increase (2016) were outside the six-year time limit and Mr G should reasonably have been aware of cause for complaint earlier. The personal guarantee complaint could not be considered as part of O's complaint because the personal guarantee was intended to be provided by Mr G as an individual, not by O as the enterprise complainant. Regarding lending decisions, Lloyds conducted affordability assessments and had no evidence of financial distress until January 2024. The bank was entitled to reduce the overdraft as a commercial decision and was not required to agree to Mr G's restructuring proposal. The BBL was provided in accordance with government scheme rules requiring only self-certification. However, Lloyds failed to offer support and exercise forbearance when Mr G clearly communicated financial difficulty in April 2025, warranting limited compensation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website