Partially upheld: Irresponsible lending complaint against The Royal Bank of Scotland Plc
Financial Ombudsman decision DRN-6240959 of 2026-06-24T00:00:00+00:00. Irresponsible lending complaint against The Royal Bank of Scotland Plc. Outcome: Partially upheld.
Decision detail
| Reference | DRN-6240959 |
|---|---|
| Decision date | 2026-06-24T00:00:00+00:00 |
| Firm | The Royal Bank of Scotland Plc |
| Product | Overdraft |
| Claim type | Irresponsible lending |
| Outcome | Partially upheld |
| Remedy | RBS must re-work Miss C's overdraft balance to remove all interest, fees and charges applied from 4 September 2021 onwards. If a balance remains, RBS should arrange a suitable repayment plan and may record negative information on the credit file backdated to 4 September 2021. If removing charges results in overpayments, these should be returned to Miss C with 8% simple interest from the date made until settlement, and any adverse credit file information should be removed. |
Summary
Miss C complained that RBS continued to provide an overdraft facility she could not afford. The overdraft was first granted in 2009 with a £3,500 limit. From October 2019, Miss C made constant use of the overdraft, but this became problematic after February 2021 when her earned income ceased and she relied only on state benefits. By September 2021, she was using at least £2,000 of her overdraft most months and had become locked into a cycle of persistent overdraft use. The ombudsman upheld the complaint in part, finding that RBS should have intervened more proactively from September 2021 onwards, particularly given the visible drop in income and the year-long gap in RBS's communications. RBS was ordered to remove all interest, fees and charges from 4 September 2021 onwards and arrange appropriate remedies depending on the resulting balance.
The Ombudsman's reasoning
The ombudsman found that by September 2021, Miss C had become locked into a cycle of persistent overdraft use with little prospect of escape without further borrowing or other funds. The substantial drop in income from February 2021 onwards, combined with continued heavy overdraft reliance, created a situation where RBS should have intervened proactively. The gap of over a year between the income drop and RBS's next communication (February 2022) was too long, and there was sufficient evidence by September 2021 for RBS to take action to reduce Miss C's overdraft reliance.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| The Royal Bank of Scotland Plc, all decisions | 6,055 | 23% |
| Irresponsible lending, all decisions | 30,675 | 37% |
| Overdraft, all decisions | 3,695 | 24% |
Source
Read the original decision on the Financial Ombudsman Service website