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

Decision detail

Summary

Mr C complained that Monzo acted irresponsibly when it granted him a £500 overdraft limit in February 2025, which he used entirely for gambling within hours of approval. Mr C argued that proportionate checks would have revealed the facility was unaffordable. The ombudsman found that Monzo's checks were proportionate based on Mr C's declared income of £35,000 annually, assessed expenditure of approximately £834 monthly, and credit history showing no recent defaults or missed payments, resulting in calculated disposable income of over £980 monthly. The ombudsman rejected additional complaints about gambling, account closure, and security procedures, finding Monzo acted fairly throughout. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the FOS standard that lenders must conduct proportionate checks appropriate to the stage of the lending relationship and the amount of credit. For an initial £500 overdraft with a declared income of £35,000 annually and no recent payment defaults, the ombudsman found Monzo's checks were proportionate. The ombudsman accepted that lenders can rely on consumer-provided information and credit check results, and that it was reasonable for Monzo not to request sight of other bank statements or suspect gambling intentions when none were disclosed. The ombudsman also found Monzo acted fairly in closing the account after default and in implementing security measures.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website