Not upheld: irresponsible lending and failure to provide support during financial difficulties complaint against National Westminster Bank Public Limited Company (NatWest)

Decision detail

Summary

Miss M complained that NatWest lent to her irresponsibly by providing a £2,000 student overdraft in September 2021 and failed to support her when she fell into financial difficulties. She paid £390 into the account and used the entire overdraft within two months, then made no further contact with the bank. NatWest sent letters in June and July 2022 requesting payment and offering support, attempted telephone contact, and issued a formal demand in August 2022 before ultimately defaulting the account. The ombudsman found that NatWest's lending decision was fair based on Miss M's credit file at the time, which showed no adverse markers, and that NatWest made reasonable attempts to contact Miss M and offer support. The ombudsman concluded that NatWest could not be faulted for failing to provide support when Miss M did not respond to or engage with the bank's offers of help, and that the account closure was not unreasonably rapid. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that NatWest's lending decision was fair because Miss M's credit file at the time showed no adverse markers such as late payments, defaults, or County Court Judgements. The ombudsman noted that student interest-free overdrafts of up to £2,000 are commonly offered and that lenders can consider potential future income for students in higher education. Regarding the financial difficulties claim, the ombudsman found that NatWest made reasonable attempts to contact Miss M through multiple letters and phone calls, offering support if she was struggling. The ombudsman reasoned that a bank cannot provide support if the customer does not respond to offers of help, and that Miss M's failure to engage did not automatically indicate financial difficulty. The ombudsman rejected the claim of rapid closure, noting the account had been unused for almost a year before closure and NatWest had attempted contact for four months prior. The ombudsman also noted that Miss M had three other active current accounts, so closure did not leave her without banking facilities.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website