Not upheld: Irresponsible lending complaint against North Edinburgh and Castle Credit Union Limited trading as Castle Community Bank (CCB)

Decision detail

Summary

Miss E complained that CCB irresponsibly lent to her by failing to carry out proportionate affordability checks before approving two loans: L1 for £4,000 in September 2024 and L2 for £9,000 in May 2025. She argued that CCB should have identified a pattern of escalating borrowing and used Open Banking to review her bank statements, which would have shown high outgoing commitments and frequent refinancing. She also disclosed that she was experiencing significant mental health difficulties at the time. The ombudsman found that CCB's checks were proportionate, including credit file review, income verification, and affordability calculations using known commitments and statistical data for estimated expenses. The credit checks revealed no missed payments, defaults, or adverse information that should have prompted further investigation. Although Miss E's borrowing increased between applications, the ombudsman found that CCB could reasonably conclude both loans were affordable based on verified income and the stated purpose of debt consolidation. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that CCB's automated checks including credit file review, income verification, and affordability calculations using known commitments and statistical data for estimated expenses were proportionate and reasonable. The credit checks revealed no signs of financial difficulty, missed payments, or adverse credit markers that should have prompted further investigation. Although Miss E's borrowing increased between applications, the absence of adverse credit information and the stated purpose of debt consolidation meant CCB could reasonably conclude the loans were affordable. The ombudsman rejected the argument that more weight should have been placed on the pattern of increasing credit commitments, finding that CCB's reliance on verified income, known commitments, and reasonable expense estimates was fair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website