Not upheld: irresponsible lending complaint against HSBC UK Bank Plc trading as First Direct Bank

Decision detail

Summary

Ms H complained that First Direct lent irresponsibly when approving a £5,000 loan in November 2019. She argued that First Direct should have identified her financial difficulties, regular overdraft usage, and significant gambling activity, and questioned why she needed another loan when she had recently received others. First Direct maintained they conducted appropriate affordability checks and found no concerns. The ombudsman found that while First Direct's checks were not properly demonstrated, the lending was likely affordable based on Ms H's income and disposable income, and First Direct was not required to review individual transactions to identify gambling activity. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while First Direct failed to demonstrate that proportionate checks were carried out, the lending decision was still fair and reasonable. By examining Ms H's bank statements, the ombudsman determined that even if First Direct had conducted proper proportionate checks (including a CRA check), they would likely have still approved the loan based on Ms H's disposable income of approximately £363 per month after existing commitments. The ombudsman concluded that the loan was affordable and sustainable, and that First Direct was not required to review individual transactions to identify gambling activity.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website