Not upheld: irresponsible lending and failure to monitor/intervene complaint against Monzo Bank Ltd

Decision detail

Summary

Mr F complained that Monzo Bank Ltd irresponsibly provided him with an overdraft facility (initially £500, increased to £1,000 then £2,000) despite no income crediting his account and his constant reliance on the facility. The ombudsman found that Monzo conducted reasonable affordability checks verifying Mr F's income of £45,000 and assessing his expenditure, making fair lending decisions at each stage. Although Mr F was a repeat overdraft user, the ombudsman determined he was not trapped in the overdraft as his external account received sufficient credits to clear the balance on several occasions. Monzo also appropriately monitored his usage and sent intervention notifications as required by FCA regulations. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Monzo's affordability checks were reasonable and proportionate, with verified income of £45,000 and low external debt supporting the lending decisions. Although Mr F was a repeat overdraft user, this alone does not indicate financial difficulty. The key issue was whether Mr F was locked into paying charges he could not afford with no reasonable prospect of repayment. The ombudsman found that Mr F's external account received sufficient credits to clear the overdraft on several occasions, demonstrating he was not stuck in the overdraft and could exit it. Monzo appropriately monitored usage and intervened by sending notifications as required by FCA regulations.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website