Not upheld: Irresponsible lending complaint against Lloyds Bank PLC

Decision detail

Summary

Mr B complained that Lloyds irresponsibly granted him an overdraft of £250 in September 2022 and ten further increases reaching £1,940 by February 2023, which he could not afford. Lloyds later agreed the overdraft became unsuitable from March 2025 and offered a refund of interest, charges, and a goodwill amount. The ombudsman did not uphold the complaint, finding that based on Mr B's clean credit history, regular income, and demonstrated ability to manage his account with disposable income, the initial overdraft and increases were not unfair. The ombudsman noted that only from early 2025 did Mr B become overstretched, at which point Lloyds' refund offer was appropriate. The ombudsman recommended Lloyds continue treating Mr B with forbearance going forward.

The Ombudsman's reasoning

The ombudsman found that based on available evidence, proportionate checks would not have shown it was unfair to provide the initial overdraft. Mr B's credit file was clean, he had regular sufficient income, and he demonstrated the ability to manage his account with disposable income available. The distinction in CONC between repeat overdraft use indicating financial difficulties versus repeat use that does not was applied, and the ombudsman found insufficient evidence of financial difficulties during the period of increases. Only from early 2025 did the situation change such that intervention was warranted, which Lloyds addressed through its refund offer.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website