Not upheld: irresponsible lending - overdraft limit increases complaint against Lloyds Bank PLC

Decision detail

Summary

Miss C complained that Lloyds Bank lent to her irresponsibly by approving an overdraft and multiple limit increases between December 2018 and July 2019, with the limit reaching £3,600. Due to jurisdiction limitations, only the final three limit increases (from June 2019 onwards) could be considered. The ombudsman found that while Lloyds failed to conduct reasonable and proportionate checks before these increases, the available evidence from Miss C's primary account would have shown sufficient income (£1,812) and manageable committed expenditure (£300) with no obvious signs of financial hardship during the relevant period. Although Miss C's account eventually defaulted in December 2019, the ombudsman found Lloyds acted fairly by stopping charges from September 2019 and providing reasonable forbearance before defaulting. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while Lloyds failed to conduct reasonable and proportionate checks before approving overdraft limit increases 6, 7 and 8, the available evidence from Miss C's primary account would have shown sufficient disposable income and no obvious signs of financial hardship during the relevant period (March-May 2019). The account activity showed income of approximately £1,812 (matching her declaration) and committed expenditure of around £300, with reasonable amounts of discretionary spending that could reduce overdraft usage. Although Miss C's regular overdraft use could indicate struggling, the statements themselves did not show sufficient evidence of financial difficulty to alert Lloyds to potential problems. The ombudsman also found Lloyds acted fairly in its forbearance approach by stopping charges from mid-September 2019 and providing reasonable time before defaulting the account in December 2019.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website