Upheld: irresponsible lending - failure to complete proportionate affordability checks complaint against TSB Bank plc
Financial Ombudsman decision DRN-6315315 of 2026-04-24T00:00:00+00:00. irresponsible lending - failure to complete proportionate affordability checks complaint against TSB Bank plc. Outcome: Upheld.
Decision detail
| Reference | DRN-6315315 |
|---|---|
| Decision date | 2026-04-24T00:00:00+00:00 |
| Firm | TSB Bank plc |
| Product | loan |
| Claim type | irresponsible lending - failure to complete proportionate affordability checks |
| Outcome | Upheld |
| Remedy | TSB Bank plc is directed to: (1) Add up the total amount of money Mr F received from the loan; (2) Deduct all repayments made by Mr F from this amount; (3) If Mr F paid more than received, refund overpayments with 8% simple interest calculated from the date overpayments were made until settlement; (4) If capital balance remains outstanding, arrange an affordable and suitable payment plan with Mr F. Tax on interest to be deducted by TSB as required by HMRC. |
Summary
Mr F applied for a £24,000 loan from TSB in May 2024, stating a monthly income of £2,500. TSB completed credit scoring and affordability checks, finding sufficient disposable income to support repayments of £536.17 per month, and approved the loan. However, Mr F's actual employment income was only £1,846 per month, and he was taking regular cash advances from credit cards (totalling £3,450 over three months) to support living expenses that exceeded his income. The ombudsman found that TSB failed to complete proportionate checks by not verifying actual income or reviewing bank statements that were available to the firm and would have revealed Mr F's unsustainable financial position. The complaint was upheld and TSB was directed to refund all interest, fees and charges applied to the loan.
The Ombudsman's reasoning
The ombudsman found that TSB failed to complete proportionate checks given the loan amount (£24,000), term (60 months), and level of repayments (£536.17). While TSB completed credit scoring and a basic affordability assessment, it did not verify Mr F's actual income or obtain a detailed picture of his outgoings. The firm's reliance on current account turnover inflated the apparent income by including cash advances from credit cards. A review of Mr F's bank statements, which were available to TSB, would have revealed that his actual income (£1,846) was significantly lower than his outgoings (£2,069) and that he was regularly borrowing from credit cards to make ends meet. Given these circumstances, proportionate checks should have led TSB to decline the application, as Mr F could not sustainably afford the new loan repayments.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| TSB Bank plc, all decisions | 3,565 | 26% |
Source
Read the original decision on the Financial Ombudsman Service website