Not upheld: Irresponsible lending complaint against Monzo Bank Ltd

Decision detail

Summary

Mr M complained that Monzo Bank Ltd irresponsibly provided him with an overdraft facility that was increased multiple times between August 2023 and June 2025. Monzo partially upheld the complaint, agreeing that limit increases from October 2024 onwards were inappropriate and refunding associated charges. The ombudsman reviewed the period prior to October 2024 and found that Monzo conducted reasonable affordability checks, verified Mr M's income at approximately £3,500 monthly, and made fair lending decisions based on his ability to repay. Although Mr M remained persistently overdrawn, the ombudsman found this did not indicate financial difficulty given his verified income exceeded the limits and he engaged in significant discretionary spending. The ombudsman also noted Monzo appropriately monitored usage and proactively contacted Mr M multiple times offering support. The complaint was not upheld for the period prior to October 2024.

The Ombudsman's reasoning

The ombudsman found that Monzo carried out reasonable and proportionate checks before lending, including income verification through CRAs, housing cost inquiry, statistical estimation of living costs, and credit file checks. The overdraft limits were affordable relative to Mr M's verified income of approximately £3,500 per month. While Mr M remained persistently overdrawn, this did not necessarily indicate financial difficulty given his verified income exceeded the limits and he had significant discretionary spending. Monzo appropriately monitored usage and contacted Mr M multiple times offering support, which constituted fair lending practice. The ombudsman also considered Section 140A of the Consumer Credit Act 1974 but found no unfairness.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website