Not upheld: irresponsible lending and unfair account management/forbearance complaint against THE ROYAL BANK OF SCOTLAND PUBLIC LIMITED COMPANY

Decision detail

Summary

Mrs W complained that RBS irresponsibly issued her a credit card with a £12,000 limit in April 2022 that she could not afford to repay, and that RBS failed to treat her fairly when she subsequently experienced financial difficulties. RBS verified Mrs W's income at approximately £4,500 monthly through a CATO search, conducted a credit search showing minimal existing debt, and made a fair lending decision. Although Mrs W's account subsequently deteriorated from October 2023 onwards with increasing balances and missed payments, the ombudsman found that RBS offered appropriate forbearance including breathing spaces, financial assistance, and multiple repayment options. The ombudsman noted that Mrs W declined a default option to protect her credit file and had obtained independent debt advice recommending she prioritise other debts. The complaint was not upheld, with the ombudsman reminding RBS of its continuing forbearance obligations and inviting Mrs W to negotiate a realistic repayment arrangement.

The Ombudsman's reasoning

The ombudsman found that RBS conducted proportionate checks at approval by verifying income through CATO search (showing approximately £4,500 monthly income), conducting a credit search, and assessing affordability. The £12,000 credit limit was considered reasonable based on calculations that Mrs W could afford it if used to maximum and repaid in reasonable time. The ombudsman noted that Mrs W applied for the card, signed acceptance, set up repayment arrangements, and actively used it, demonstrating her consent and understanding. Regarding forbearance, the ombudsman found that RBS offered multiple options including breathing spaces, financial assistance, time for independent advice, and forbearance options. The ombudsman noted that Mrs W was offered a default option that would have resulted in zero interest but declined it to protect her credit file. The ombudsman found that Mrs W had knowledge of how the account worked, understood interest was charged, and made conscious spending decisions. The ombudsman observed that Mrs W received independent debt advice recommending she prioritise other debts and chose not to prioritise the credit card. The ombudsman concluded that RBS met its regulatory obligations and did not lend irresponsibly or treat Mrs W unfairly.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website