Not upheld: irresponsible lending and unfair relationship under Section 140A Consumer Credit Act 1974 complaint against National Westminster Bank Public Limited Company (NatWest)

Decision detail

Summary

Miss C complained that NatWest lent to her irresponsibly through two overdraft facilities (a student account with a £2,000 limit and a reward account with a £1,500 limit), claiming the lending was unaffordable and caused her financial difficulty. NatWest rejected the complaint, and the ombudsman reviewed it under Section 140A of the Consumer Credit Act 1974 as a complaint about an unfair lending relationship. The ombudsman found that NatWest's affordability checks were proportionate, Miss C had reasonable income and low credit utilisation at the time of lending decisions, and her account statements showed she had sufficient disposable income to cover essential expenditure and repay the overdrafts over a reasonable period. Although NatWest was late in monitoring the student account (not contacting Miss C until 2024), this would not have materially changed the outcome. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied Section 140A of the Consumer Credit Act 1974 to assess whether the lending relationship was unfair. For the student account, while NatWest was late in contacting Miss C about overdraft usage (2024 rather than 2022-2023), there was no evidence she was unable to repay the overdraft over a reasonable period. For the reward account, NatWest's initial affordability checks were proportionate given Miss C's reasonable income, low credit utilisation, and no signs of financial difficulty at the time of lending decisions. Although Miss C used the overdraft repeatedly, her account statements showed she had sufficient disposable income to cover essential expenditure and would have been able to repay both overdrafts over a reasonable period had she chosen to do so. NatWest's monitoring and contact with Miss C about usage was appropriate and in line with regulatory expectations.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website