Not upheld: irresponsible lending and unfair relationship under Section 140A Consumer Credit Act 1974 complaint against Barclays Bank UK PLC

Decision detail

Summary

Mr and Mrs L complained that Barclays lent to them irresponsibly by rapidly increasing their overdraft limit from £190 to £970 between August 2018 and September 2019, and failed to identify financial difficulties during annual reviews or offer forbearance. They sought refunds of interest and charges since 2019 and removal of adverse credit file information. The ombudsman considered the complaint under Section 140A of the Consumer Credit Act 1974 as relating to an unfair lending relationship. After reviewing bank statements, credit reference agency reports, and account transaction history, the ombudsman found that Barclays' lending decisions were fair and reasonable based on the information available at the time, including stable joint income of approximately £2,500 per month and responsible account management. The ombudsman also found no evidence of financial difficulties requiring intervention under CONC rules during the post-lending monitoring period. 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. The key assessment was whether Barclays carried out proportionate affordability checks that would have revealed irresponsible lending. The ombudsman found that at the time of each lending decision, the account showed stable income, manageable expenditure, and responsible use of the overdraft facility with regular returns to credit. The rapid increase in limits from £190 to £970 was noted but the ombudsman concluded that had Mr and Mrs L applied for £970 in August 2018, it would likely have been approved. Regarding monitoring and forbearance, the ombudsman reviewed annual account performance from September 2019 onwards and found no signs of financial difficulties as defined in CONC 1.3, and that the account could have been repaid within a reasonable period as required by CONC 5.2A.28. Therefore, Barclays was not obligated to intervene under CONC 5D.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website