Not upheld: irresponsible lending and unfair relationship under section 140A Consumer Credit Act 1974 complaint against Bank of Scotland plc trading as Halifax

Decision detail

Summary

Miss L complained that Halifax irresponsibly provided her with an overdraft facility that was unaffordable, including five increases between June and July 2020 reaching £1,000, and continued to provide the facility on the same terms despite signs of financial difficulty. The ombudsman assessed the complaint under section 140A of the Consumer Credit Act 1974 regarding whether the relationship was unfair. The ombudsman found Halifax's checks were reasonable and proportionate, based on Miss L's income, committed expenditure, and account management, and that proportionate checks would have shown any difficulties were due to money management rather than unaffordability. Although Miss L showed increased signs of financial difficulty from late 2023 onwards, the ombudsman concluded Halifax was not obliged to provide forbearance given what checks would have revealed and Miss L's lack of prior engagement. The complaint was not upheld, though the ombudsman encouraged Miss L to contact Halifax's Customer Financial Assistance team and reminded Halifax of its ongoing obligations to treat Miss L fairly.

The Ombudsman's reasoning

The ombudsman applied section 140A of the Consumer Credit Act 1974 to assess whether the relationship between Halifax and Miss L was unfair. The ombudsman found that Halifax's checks were reasonable and proportionate at each lending stage, based on Miss L's income, committed expenditure, and account management. While acknowledging returned payments from late 2023 onwards, the ombudsman concluded that more detailed checks would likely have shown these were due to money management rather than actual financial difficulties, particularly given Miss L's discretionary spending patterns and available savings. The ombudsman found Halifax was not obliged to provide forbearance given what proportionate checks would have revealed and Miss L's lack of prior engagement. Regarding vulnerability, the ombudsman found no documentary evidence that Halifax was aware of Miss L's health condition or vulnerable status before her complaint, and therefore could not retrospectively apply this knowledge to assess Halifax's earlier actions.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website