Not upheld: irresponsible lending complaint against National Westminster Bank Public Limited Company (NatWest)

Decision detail

Summary

Mr and Mrs M complained that NatWest lent to them irresponsibly when providing a £7,500 loan in August 2024, arguing their affordability was not accurately assessed. They cited existing debts, the need to borrow from family to complete the car purchase, and one party's mental health issues as reasons the loan should not have been granted. NatWest defended its decision, stating it had conducted appropriate checks using declared income, CRA data, and internal account conduct information, which showed the loan was affordable. The ombudsman found that NatWest's checks were reasonable and proportionate, the loan was affordable based on calculated disposable income of £1,709 against repayments of £145.49, and current account statements showed good financial management. The mental health condition was not disclosed to NatWest and the subsequent income reduction was not foreseeable, so the complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that NatWest conducted reasonable and proportionate checks by gathering information about Mr and Mrs M's circumstances, assessing their ability to meet repayments, completing a credit check showing no adverse information, and calculating affordability based on declared income and expenditure. The current account statements demonstrated good financial management with minimal overdraft use and positive balances. The mental health condition was not disclosed to NatWest and therefore could not have influenced the lending decision. The subsequent income reduction was not foreseeable by NatWest as it was not communicated. The loan repayments of £145.49 were affordable based on the calculated disposable income of £1,709.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website