Not upheld: irresponsible lending and failure to monitor account complaint against Bank of Scotland Plc

Decision detail

Summary

Mr O complained that Bank of Scotland lent to him irresponsibly and failed to monitor his account, leaving him stuck in an overdraft cycle for approximately 15 years from 2011. The ombudsman found that while the lending decisions in 2012-2013 were unfair because Mr O was reliant on payday lending to manage his overdraft, his circumstances improved from 2014 onwards and the relationship became fair again through his own efforts. The complaint was not upheld because Mr O delayed more than six years before complaining despite being aware of the problem since 2011, and under Supreme Court precedent, remedies for unfair relationships should be denied where claimants substantially delay raising claims. The ombudsman found no unfairness in the relationship from 2014 onwards, including the 2025 lending decision which was supported by proportionate affordability checks.

The Ombudsman's reasoning

The ombudsman found that while Bank of Scotland failed to carry out fair lending decisions in 2012 and 2013 when Mr O was reliant on payday lending, the relationship became fair again by 2014 when his circumstances improved through his own efforts. Critically, Mr O was aware of the problem from 2011 but did not complain until July 2025, a delay of more than six years. Following the Supreme Court's guidance in Smith v Royal Bank of Scotland Plc [2023], the ombudsman determined that remedies for unfair relationships should be denied where the claimant substantially delayed making a claim after knowing the relevant facts. The ombudsman also found no unfairness in the relationship from 2014 onwards, including the 2025 lending decision which was supported by proportionate affordability checks.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website