Not upheld: irresponsible lending / unaffordable loan complaint against Barclays Bank UK PLC (trading as Tesco Bank)

Decision detail

Summary

Mr C complained that a £3,000 personal loan provided by Tesco Bank in July 2018 was unaffordable and caused ongoing financial difficulty. Tesco Bank obtained Mr C's income and expenditure information and conducted a credit check showing no significant adverse information before approving the loan with monthly repayments of £72.91. Mr C's bank statements later revealed significant gambling and credit reliance, but the ombudsman found Tesco Bank could not reasonably have been expected to discover these issues without access to bank statements, given the low loan amount and absence of adverse credit information. The ombudsman did not uphold the complaint, finding the lending was not irresponsible and the relationship was not unfair.

The Ombudsman's reasoning

The ombudsman applied section 140A of the Consumer Credit Act 1974 to assess whether the lending relationship was unfair. The ombudsman found that Tesco Bank obtained a reasonable amount of information before deciding to lend, including income, expenditure details, and a credit check. Although Mr C's bank statements revealed gambling and credit reliance, Tesco Bank did not have access to these statements and could not reasonably have been expected to request them given the low loan amount, low monthly repayment, and absence of significant adverse credit information. Therefore, Tesco Bank could not reasonably have been aware of Mr C's gambling issues and was not irresponsible in lending.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website