Not upheld: irresponsible lending and unfair relationship complaint against National Westminster Bank PLC

Decision detail

Summary

Miss B complained that NatWest lent to her irresponsibly when it provided a £20,000 credit card in February 2017, leading to financial difficulties and stress. NatWest had conducted affordability checks showing disposable income of approximately £400 per month, but the ombudsman found these checks should have been more proportionate given the high limit relative to her £1,650 monthly income. However, reconstruction of what thorough checks would have revealed, using bank statements, showed Miss B had sufficient disposable income to sustainably afford the credit. The ombudsman found no evidence of unfairness in the lending decision or subsequent account management, as Miss B had managed the account reasonably and made no contact with NatWest about difficulties prior to her complaint. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied Section 140A of the Consumer Credit Act 1974 to assess whether the relationship was unfair. Whilst NatWest's initial checks were ordinarily reasonable, the high credit limit relative to Miss B's income required more thorough proportionate checks. However, reconstruction of what proportionate checks would have revealed, based on available bank statements, showed Miss B had sufficient disposable income to sustainably afford the credit. The ombudsman found no evidence that NatWest acted unfairly in its lending decision or subsequently, as Miss B managed the account reasonably and did not contact NatWest about difficulties prior to her complaint.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website