Not upheld: irresponsible lending - insufficient affordability checks complaint against Santander UK Plc

Decision detail

Summary

Mr M complained that Santander lent irresponsibly when providing a £4,000 loan in September 2024, arguing that insufficient checks would have revealed unaffordable repayments and gambling transactions. Santander verified Mr M's income through payslips, conducted credit reference agency checks showing manageable existing debts, and calculated sufficient disposable income of £208 monthly. The ombudsman found Santander's checks were proportionate to the circumstances and not required to extend to bank statement review, as the available information showed no indication of financial difficulty. Although Mr M's subsequent bank statements revealed excessive gambling, the ombudsman determined this was not information Santander was required to obtain and upheld the firm's lending decision as fair and reasonable.

The Ombudsman's reasoning

The ombudsman applied the regulatory requirement for reasonable and proportionate affordability checks that are borrower-focused. The checks must be proportionate to the specific circumstances including the consumer's financial history, current situation, and the amount/type of credit sought. Santander verified Mr M's income, conducted CRA checks, and performed affordability modelling showing sufficient disposable income. Given that Mr M was not overly indebted, had no adverse credit markers, and the loan term was only 12 months, the ombudsman concluded Santander's checks were proportionate and no further checks were required. While acknowledging that bank statements would have revealed gambling, the ombudsman determined that such checks were not required based on the information available from proportionate checks, and the decision must be based on what was available to the lender at the time of assessment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website