Upheld: irresponsible lending and failure to monitor account for signs of vulnerability and repayment difficulties complaint against Lloyds Bank Plc

Decision detail

Summary

Miss D complained that Lloyds irresponsibly provided her with an overdraft facility while she suffered from a gambling addiction between February 2020 and February 2023, during which she lost over £32,000. She alleged Lloyds failed to provide support despite obvious patterns of harm and instead profited from her vulnerability through overdraft charges. Lloyds partially upheld the complaint, refunding £224.16 in fees and interest and correcting her credit file, but Miss D sought greater compensation or debt write-off. The ombudsman upheld the complaint, finding Lloyds should have monitored her account more closely under regulatory requirements, but rejected the debt write-off request as Lloyds lacked full visibility of her multi-bank gambling and Miss D did not disclose her difficulties. The ombudsman ordered £300 compensation as fair and reasonable.

The Ombudsman's reasoning

The ombudsman found that Lloyds should have monitored Miss D's account more closely under CONC 6.7.2R, which requires lenders to monitor repayment records and take appropriate action where there are signs of repayment difficulties. While acknowledging that customers have autonomy to spend their money and that Lloyds could not see the full picture of Miss D's gambling across multiple banks, the ombudsman determined that Lloyds' lack of action caused Miss D to lose confidence in them. However, the ombudsman was not persuaded it would be fair to require Lloyds to write off the outstanding debt, as Miss D's account usage was mixed (not exclusively gambling-related) and she did not communicate her difficulties to Lloyds despite opportunities to do so.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website