Partially upheld: irresponsible lending - failure to conduct proportionate affordability assessment complaint against Santander UK Plc

Decision detail

Summary

Mr B complained that Santander irresponsibly provided a credit card in 2020 and a loan in 2023 without conducting proportionate affordability checks. The ombudsman found that for the credit card, Santander failed to validate Mr B's declared income and used an incorrect figure of £1,941 instead of his actual net monthly income of £1,877 shown in bank statements; using the correct figure would have left only £11 remaining disposable income, making repayments unsustainable. For the loan in 2023, the ombudsman found Santander's checks were reasonable because the loan was for debt consolidation, existing credit appeared well managed, and remaining disposable income was adequate at £209 per month. The complaint was partially upheld; Santander must refund overpayments on the credit card with interest and remove adverse credit file information, while the loan provision was found to be responsible.

The Ombudsman's reasoning

For the credit card, Santander failed to validate Mr B's declared income and used an incorrect figure of £1,941 instead of the actual £1,877 shown in bank statements. Using the correct income figure would have left only £11 remaining disposable income per month, making repayments unsustainable. For the loan, Santander's checks were reasonable and proportionate because the loan was for debt consolidation (not increasing overall debt), existing credit appeared well managed, and remaining disposable income was higher at £209 per month. The ombudsman was satisfied that Santander was entitled to rely on point-in-time CRA checks regarding overdraft usage rather than requiring full bank statement review.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website