Not upheld: irresponsible lending - overdraft provision and limit increases complaint against Nationwide Building Society

Decision detail

Summary

Mr S complained that Nationwide acted irresponsibly in providing him with a flex account overdraft of £1,500 in October 2021 and subsequently increasing it to £1,750 and then £2,000 in September 2023. The ombudsman found that while the initial overdraft checks were reasonable and proportionate, the checks before the September 2023 increases were not, particularly given Nationwide's prior knowledge of Mr S's regular overdraft use evidenced by warning letters sent in April and June 2023. However, the ombudsman concluded that even with better checks, there was no evidence that Mr S was over-extending his borrowing or unable to repay on a sustainable basis, as he appeared to be managing his finances reasonably well as a student with funding support. The complaint was not upheld, and no remedy was ordered.

The Ombudsman's reasoning

The ombudsman applied the FOS approach to unaffordable and irresponsible lending. While the checks before the September 2023 increases were not proportionate given Nationwide's prior knowledge of regular overdraft use, the ombudsman concluded that better checks would not have revealed unfair lending. Mr S appeared to be managing his finances reasonably well, was not over-extending his borrowing capability, and was not relying on the overdraft for committed expenditure. Nationwide's monitoring through warning letters was considered sufficient given the level of overdraft reliance did not suggest significant financial deterioration.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website