Not upheld: irresponsible lending complaint against Nationwide Building Society

Decision detail

Summary

Miss P complained that Nationwide irresponsibly lent to her by approving a £3,000 credit card in December 2023, particularly given her age and the fact that her overdraft had been increased to £5,000 in the same month. Miss P argued she was vulnerable and inexperienced, and that the lending contributed to her later entering a Debt Management Plan. The ombudsman found that while Nationwide did not conduct a formal affordability assessment, the available information at the time showed Miss P had a £35,000 annual salary, no unsecured debt being used, and sufficient disposable income after priority bills to afford the credit card repayments. The ombudsman rejected the complaint, finding the lending decision was fair and that Miss P's later financial difficulties were not foreseeable at the time of approval.

The Ombudsman's reasoning

While Nationwide did not complete a formal affordability assessment, the ombudsman found that based on the available information at the time of lending, Miss P had sufficient disposable income after priority bills to afford sustainable repayments on a £3,000 credit limit. The use of an arranged overdraft does not automatically indicate inability to afford credit. The ombudsman rejected the argument that Miss P's age alone should have triggered further checks, as this could be discriminatory. The later entry into a DMP was not foreseeable at the time of the lending decision given Miss P's financial position at that time.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website