Not upheld: Persistent overdraft use complaint against National Westminster Bank plc (NatWest)

Decision detail

Summary

Mr L complained that NatWest irresponsibly allowed him to remain in a pattern of long-term overdraft borrowing from February 2020 onwards on a £2,000 student overdraft. The ombudsman examined whether NatWest should have intervened based on heavy overdraft usage (over £1,900 for extended periods), unpaid transactions, and the long-term nature of the borrowing. However, the ombudsman found that Mr L demonstrated ability to make regular transfers from other accounts, suggesting sustainable repayment capacity, and that there was insufficient evidence of actual or potential financial difficulties. The ombudsman concluded that NatWest's monitoring was adequate and did not require intervention, and therefore did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman applied the FOS's general approach to irresponsible lending complaints and the Consumer Credit Sourcebook (CONC) guidance. While acknowledging that overdrafts are intended for short-term use and that Mr L's usage was long-term and heavy, the ombudsman found insufficient evidence of actual or potential financial difficulties. The key factors were: (1) Mr L demonstrated ability to make regular transfers from other accounts, suggesting sustainable repayment capacity; (2) unpaid transaction fees alone were insufficient to indicate financial difficulty; (3) interest was not charged until November 2022, limiting the period of potential detriment; (4) NatWest's proactive communications about support were not responded to; and (5) CONC distinguishes between repeat overdraft use indicating financial difficulty and that which does not. The ombudsman concluded Mr L appeared able to continue repaying sustainably without worsening his financial situation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website