Upheld: irresponsible lending - inadequate affordability assessment complaint against Barclays Bank UK PLC, trading as Tesco Bank
Financial Ombudsman decision DRN-6288588 of 2026-04-20T00:00:00+00:00. irresponsible lending - inadequate affordability assessment complaint against Barclays Bank UK PLC, trading as Tesco Bank. Outcome: Upheld.
Decision detail
| Reference | DRN-6288588 |
|---|---|
| Decision date | 2026-04-20T00:00:00+00:00 |
| Firm | Barclays Bank UK PLC, trading as Tesco Bank |
| Product | personal loan |
| Claim type | irresponsible lending - inadequate affordability assessment |
| Outcome | Upheld |
| Remedy | Tesco Bank must: (1) calculate total repayments made by Mr T and deduct from the £15,000 borrowed; (2) if Mr T overpaid, refund the difference plus 8% simple interest per year from the date of overpayment; (3) if a capital balance remains, arrange an affordable payment plan with Mr T; (4) remove all adverse information regarding the account from Mr T's credit file upon clearance or once overpayments are refunded; (5) not charge any interest or charges under the credit agreement. |
Summary
Mr T complained that Tesco Bank lent him £15,000 irresponsibly in March 2022 while he was unemployed. He had declared an income of £3,500 but was actually unemployed and had approximately £35,000 in existing unsecured debt. The ombudsman found that Tesco's affordability assessment was not proportionate to Mr T's circumstances, particularly given his high debt-to-income ratio and the fact that the new loan would increase his total indebtedness by almost 50%. Bank statements revealed Mr T was engaged in a cycle of borrowing and investing in crypto, which Tesco would have discovered with proper checks. The ombudsman upheld the complaint and ordered Tesco to refund interest and charges, remove adverse credit file information, and arrange an affordable repayment plan for any remaining capital.
The Ombudsman's reasoning
The ombudsman found that while Tesco was technically entitled to rely on declared income and income verification is not required in every case, the proportionality principle required further checks given Mr T's circumstances. The combination of high existing unsecured debt (equivalent to declared salary), a substantial new loan (50% increase in indebtedness), significant monthly repayments (over £300 for five years), and existing mortgage obligations (£1,600 monthly) should have triggered proportionate additional checks. Bank statements would have revealed Mr T was unemployed and engaged in a cycle of borrowing and investing in crypto, making the lending decision irresponsible.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Barclays Bank UK PLC, trading as Tesco Bank, all decisions | 66 | 11% |
Source
Read the original decision on the Financial Ombudsman Service website