Not upheld: irresponsible lending - unaffordable overdraft facility complaint against Monzo Bank Limited

Decision detail

Summary

Miss C complained that Monzo Bank Limited irresponsibly provided her with a £250 overdraft facility in November 2024, arguing that Monzo should have discovered she was in an active Individual Voluntary Arrangement (IVA) and that the lending was unaffordable. Monzo's checks included income validation, credit reference checks, and assessment of disposable income, all of which appeared proportionate for the modest limit. The ombudsman found that Monzo's checks were proportionate, the IVA had fallen outside the standard credit file reporting period and was not disclosed by Miss C, and even if known, consumers can borrow up to £500 while in an IVA. The complaint was not upheld, and no compensation was awarded, though Monzo was reminded of its obligations to treat Miss C fairly in ongoing communications and debt recovery.

The Ombudsman's reasoning

The ombudsman found that Monzo's checks were proportionate given the modest £250 overdraft limit and the information obtained. The credit check did not reveal any IVA within the last three years because Miss C's IVA from January 2018 had fallen outside the standard six-year reporting period. Even if Monzo had been aware of the IVA, consumers can obtain credit up to £500 while in an IVA without their Insolvency Practitioner's authority. Miss C did not disclose her IVA status when applying. There was no evidence that Miss C made Monzo aware of vulnerability or financial difficulties until her December 2025 complaint, and Monzo provided forbearance once it became aware of her situation. The ombudsman rejected the claim for compensation as no unfair treatment was found.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website