Not upheld: irresponsible lending and failure to monitor account affordability complaint against The Royal Bank of Scotland Public Limited Company (RBS)

Decision detail

Summary

Mr D complained that RBS irresponsibly continued to provide an overdraft facility from 2021 onwards that had become unsustainable and unaffordable, and failed to properly monitor the account. RBS had sent multiple letters warning of overdraft costs but Mr D did not engage. The ombudsman examined account statements from 2021 onwards and found that while the account showed persistent overdraft usage from 2023-2024, Mr D appeared to have sufficient disposable income to repay it over a reasonable period. By March 2025, when account activity clearly indicated financial difficulty, Mr D contacted RBS to set up a payment plan, which RBS appropriately agreed to by suspending the account and stopping interest charges. The ombudsman concluded RBS acted fairly and did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman found that while RBS had an ongoing duty to review the overdraft facility regularly to ensure affordability, the account statements from 2021-2024 did not show clear signs of unaffordability that would have required intervention. Although Mr D persistently used the overdraft from 2023-2024, he appeared to have sufficient disposable income to repay it over a reasonable period. By March 2025, when account usage clearly indicated financial difficulty (persistent overdraft at limit with minimal deposits), Mr D simultaneously contacted RBS to set up a payment plan, which RBS appropriately agreed to by suspending the account and stopping interest charges. The ombudsman concluded RBS acted fairly by taking this action when it became apparent Mr D was struggling, and that RBS was not required to suspend interest prior to April 2025.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website