Not upheld: irresponsible lending - inadequate affordability checks complaint against Santander UK plc

Decision detail

Summary

Miss C complained that Santander irresponsibly approved a £4,000 credit card in March 2023 without conducting thorough enough affordability checks, when she was already struggling financially and reliant on overdrafts and other credit. Santander argued it had conducted reasonable checks using credit reference agencies and affordability modelling, which showed Miss C had modest existing debts of £3,500 (well-managed with no adverse information) and sufficient disposable income. The ombudsman upheld Santander's position, finding the checks were reasonable and proportionate, and that at the time of application there were no signs of financial stress that would have required further investigation. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Santander was not required to carry out a specific set of checks but should be borrower-focused. The checks Santander did carry out using credit reference agencies and affordability modelling were reasonable and proportionate. At the time of application in March 2023, there were no signs of financial stress such as CCJs, late payments, or defaults. The existing debt level of £3,500 was not concerning given Miss C's declared income of £28,000. The affordability model showed sufficient net disposable income to meet the new borrowing costs. The fact that Miss C later entered a debt management plan does not mean the lending was irresponsible at the time of approval, as the ombudsman must assess what Santander should have reasonably known at the time of the decision.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website