Not upheld: Irresponsible lending complaint against Monzo Bank Limited

Decision detail

Summary

Mr A complained that Monzo irresponsibly provided him with a Flex credit card (initial limit £1,100, increased to £5,500) without identifying that he was gambling and experiencing financial difficulties. Mr A argued that Monzo should have reviewed his current account statements which showed gambling transactions and transfers to another account. The ombudsman found that Monzo's checks were proportionate to the circumstances, that lenders are not required to conduct full financial reviews of all accounts, and that the affordability calculations based on declared income and existing commitments were reasonable. The ombudsman distinguished this case from Mr A's upheld overdraft complaint, noting that different products can lead to different outcomes. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the principle that lenders' checks should be proportionate to the circumstances, and that there is no mandated list of checks required. For the initial £1,100 credit limit, Monzo's checks were reasonable given the modest amount, Mr A's declared income of £51,000, low housing costs, minimal existing debt, and the fact that the default was 3.5 years old. The ombudsman rejected the argument that Monzo should have reviewed current account statements, noting that lenders are not required to conduct full financial reviews solely because a customer holds other products. For the credit limit increase to £5,500, the ombudsman found the checks proportionate and the payments affordable based on the information available. The ombudsman distinguished this case from the upheld overdraft complaint, noting that different products can have different outcomes depending on the nature of the borrowing and checks conducted.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website