Not upheld: system error in loan application processing; credit file impact; lending decision based on current employment status complaint against National Westminster Bank Public Limited Company (NatWest)

Decision detail

Summary

Ms I complained about NatWest's administration of her personal loan applications in October 2025, during which a system error caused two hard searches to be recorded on her credit file despite neither application proceeding. NatWest acknowledged the error, removed the hard searches, and paid £200 compensation. Ms I remained dissatisfied, claiming the hard searches damaged her credit score and caused other lenders to offer higher interest rates, and objecting to NatWest's refusal to lend while she was not working. The ombudsman found NatWest's remedial actions sufficient and reasonable, rejecting Ms I's claims about causation of higher interest rates and finding the lending decision based on current income status to be reasonable. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman agreed NatWest made an error but found the bank's remedial actions were appropriate and sufficient. The removal of hard searches was correct because the applications never progressed to a formal lending decision due to the technical error. The ombudsman found insufficient evidence to hold NatWest responsible for other lenders' subsequent interest rate decisions, as multiple factors influence lending decisions. The ombudsman found it reasonable for NatWest to decline a loan application when the applicant was not currently working, regardless of prior or subsequent earning capacity. The ombudsman rejected arguments about CIFAS Protective Registration preventing searches, noting identity verification had already occurred via biometrics or online banking.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website