Not upheld: irresponsible lending and unfair overdraft charges complaint against Santander UK Plc

Decision detail

Summary

Miss A complained about overdraft charges applied by Santander to her current account, arguing the charges were unfair as she could not afford them. Miss A had obtained a student overdraft in August 2020 with a £2,000 limit, which remained interest-free until the account converted to standard terms in September 2024. The ombudsman found that Santander acted reasonably in providing the initial interest-free overdraft to a student and that when interest began accruing, there were no objective indicators that Miss A was in financial difficulty. Although Miss A used her overdraft repeatedly, her account showed sufficient incoming credits and discretionary spending, suggesting she had capacity to reduce usage. The ombudsman concluded that Santander was reasonably entitled to believe Miss A was choosing to use the overdraft rather than being forced to by financial necessity, and therefore did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman found that Santander's initial decision to provide an interest-free overdraft to a student was reasonable given the circumstances and provided better alternatives than other credit sources. When interest began accruing, the ombudsman found no objective indicators that Miss A was in financial difficulty based on regulatory guidance. Although Miss A used her overdraft repeatedly, this alone does not indicate financial difficulty. Critically, Miss A's account received sufficient credits to clear the overdraft and showed discretionary spending, suggesting she had capacity to reduce overdraft usage. The ombudsman concluded that Santander was reasonably entitled to believe Miss A was choosing to use the overdraft rather than being forced to by financial necessity.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website