Upheld: Irresponsible lending complaint against NATIONAL WESTMINSTER BANK PUBLIC LIMITED COMPANY (NatWest)

Decision detail

Summary

Mr N complained to NatWest about excessive overdraft charges totalling over £3,000 accumulated since 2020, arguing that his regular gambling should have indicated financial vulnerability and prompted NatWest to intervene. While the Ombudsman found NatWest's handling of the account from 2020 to early 2021 was reasonable, the decision in April 2021 to more than double Mr N's overdraft limit from £2,000 to £4,500 was found to be irresponsible. The account statements showed approximately 300 gambling transactions totalling thousands of pounds in the three months before the increase, which should have triggered proportionate affordability checks that would have revealed unsustainable spending patterns. The Ombudsman upheld the complaint and ordered NatWest to refund interest and charges accrued on balances exceeding £2,000 after April 2021, remove adverse credit file information, and arrange an affordable repayment plan for any remaining balance.

The Ombudsman's reasoning

The Ombudsman found that while Mr N's account usage from 2020 onwards did not raise particular alarms initially, the April 2021 decision to more than double the overdraft limit was irresponsible. Given the size of the increase (to an amount exceeding monthly income) and the clear evidence of compulsive gambling spending (approximately 300 transactions to gambling sites in the preceding three months), NatWest should have conducted proportionate affordability checks. Had they done so, they would have discovered unsustainable spending patterns and should not have approved the increase, as it would likely cause foreseeable harm by further supporting a gambling habit using a facility intended for short-term use.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website