Not upheld: Irresponsible lending complaint against Bank of Scotland plc trading as Halifax

Decision detail

Summary

Miss W complained that Halifax irresponsibly provided her with an overdraft facility from 2018 onwards, which she claimed was unaffordable and caused her financial loss. The overdraft limit reached a maximum of £1,000 by July 2022 before being reduced from late 2024. Miss W argued that better checks would have revealed she was reliant on other lending and family support to meet living costs. The ombudsman reviewed the complaint as an allegation of an unfair credit relationship under section 140A of the Consumer Credit Act 1974. The ombudsman found that Halifax's affordability checks were proportionate, particularly from September 2021 onwards, and that the evidence showed Miss W had sufficient disposable income to repay the facility within a reasonable period. Although Miss W's overdraft use was high and there were sporadic over-limit instances, these were not sustained enough to suggest financial difficulty requiring Halifax's intervention. 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 between Halifax and Miss W was unfair. The ombudsman found that Halifax's checks were proportionate, particularly from September 2021 onwards when formal affordability assessments were conducted. Although Miss W's overdraft use increased and remained high, the sporadic nature of over-limit instances and the evidence of discretionary spending and savings suggested Miss W had disposable income to repay the facility. The salary increase from May 2023 provided further assurance of improved financial circumstances. The ombudsman concluded that the instances of potential financial difficulty were not sustained or consistently demonstrated enough to warrant Halifax's intervention or refusal to continue providing the facility.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website