Not upheld: Irresponsible lending complaint against Monzo Bank Limited

Decision detail

Summary

Miss O complained that Monzo Bank Limited irresponsibly lent to her by providing a credit card with an initial £500 limit and increasing it five times to £5,500 between December 2021 and January 2023. Miss O argued that while individual lending decisions might appear affordable in isolation, the cumulative effect of rapid credit increases across multiple products with the same lender should have prompted greater caution, particularly given her overdraft usage and deteriorating mental health. The ombudsman found that Monzo's checks were reasonable and proportionate, and that proportionate checks would have shown Miss O could afford the credit based on her verified income and estimated expenditure, rejecting the complaint and finding no unfair lending or treatment.

The Ombudsman's reasoning

The ombudsman found that Monzo's checks were reasonable and proportionate for the initial account opening and CLI 1-3. For CLI 4-5, while the ombudsman considered that more thorough checks ought to have been conducted given the pattern of rapid requests for additional credit, proportionate checks would likely have shown Miss O could afford the increases. The ombudsman examined bank statements and concluded Miss O had sufficient income to meet existing credit commitments, essential expenditure, and reasonable monthly repayments on the increased limits. The ombudsman rejected the argument that the cumulative lending pattern should have prevented further lending, noting that the final credit limit was not significant relative to Miss O's income and would not have raised concerns if requested from the outset.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website