Not upheld: Irresponsible lending complaint against National Westminster Bank Public Limited Company (NatWest)

Decision detail

Summary

Mr B complained that NatWest irresponsibly approved two credit cards and increased the limit on the first card, despite Mr B having persistent overdraft use, gambling transactions visible in his bank statements, and relatively low income of £2,400 per month against nearly £18,000 in total credit limits. NatWest relied on affordability modelling and credit searches showing no adverse payment markers. The ombudsman found that NatWest's proportionate checks were reasonable at each stage: the initial £7,500 card was appropriate given stable income and no adverse markers; the March 2022 increase to £9,750 was reasonable as the card had been managed well and gambling transactions were not consistently flagged; and the August 2022 second card was justified by verified income and affordability calculations. The ombudsman declined to uphold the complaint, distinguishing between the credit card and overdraft products and their different regulatory requirements.

The Ombudsman's reasoning

The ombudsman applied the FOS approach to irresponsible lending, requiring proportionate checks based on the stage of the lending relationship and risk factors. For the initial £7,500 card, the ombudsman found the checks proportionate given Mr B's stable income, reasonable living costs, existing debt levels, and absence of adverse markers. For the March 2022 increase, the ombudsman noted that while some gambling transactions occurred in February 2022, NatWest's screening showed no significant gambling flagged, the decision was likely taken before those transactions were visible, and the card had been managed well with no payment problems. For the August 2022 second card, the ombudsman found the affordability calculations reasonable based on verified income, estimated living costs, and existing debt payments, noting that proportionate checks did not require a full financial review solely because Mr B held other products. The ombudsman distinguished between different credit products (overdraft vs credit card) and their different regulatory requirements, and found no evidence of persistent debt problems that would have triggered monitoring concerns.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website