Not upheld: irresponsible lending - affordability assessment complaint against NATIONAL WESTMINSTER BANK PUBLIC LIMITED COMPANY

Decision detail

Summary

Mr P complained that NatWest lent him £11,000 irresponsibly in July 2022, arguing the loan was unaffordable given his actual income fluctuations, significant debt repayments, and overdraft dependency. NatWest verified his declared income of £2,700 through current account data and calculated he would have £854 disposable income after the £702.61 monthly loan repayment. The ombudsman found NatWest's checks were proportionate and the lending decision fair, noting that the loan was partly used for debt consolidation, which would have improved Mr P's actual financial position beyond what was calculated. The complaint was not upheld, and NatWest's previous £150 compensation for complaint handling errors was deemed adequate.

The Ombudsman's reasoning

The ombudsman applied the FCA's proportionality test for lending checks. While the monthly repayment of £702.61 was high relative to income, NatWest's checks were proportionate given the loan amount and term. The ombudsman found that NatWest was not required to verify actual bank statements or conduct a borrower-focused test beyond what was proportionate. The disposable income margin of £854 minus £702.61 was finely balanced but reasonable, particularly because the loan was partly used for debt consolidation, which would have reduced Mr P's actual monthly credit commitments below the estimated £463.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website