Not upheld: irresponsible lending - inadequate affordability checks complaint against National Westminster Bank Public Limited Company (NatWest)

Decision detail

Summary

Mrs W complained that NatWest lent irresponsibly by failing to conduct adequate affordability checks before approving a £50,000 consolidation loan in September 2022, particularly given she had taken two previous consolidation loans within 15 months. The ombudsman agreed the checks were not proportionate but found that had reasonable checks been performed, they would have revealed disposable income of approximately £1,500-£2,200 monthly, sufficient to support the £1,001.05 monthly repayment. The ombudsman rejected Mrs W's arguments regarding unstable income, child benefit inclusion, and existing credit commitments, concluding the lending decision was fair and the complaint was not upheld.

The Ombudsman's reasoning

While the ombudsman agreed that NatWest's automated checks were not proportionate to the circumstances—particularly given the pattern of two consolidation loans within 15 months and a third loan for double the combined earlier lending—the key question was whether reasonable checks would have revealed irresponsible lending. Based on current account records showing disposable income of approximately £1,500-£2,200 monthly against a required repayment of £1,001.05, the ombudsman concluded sustainable repayments could have been made. The ombudsman rejected Mrs W's arguments that income was unstable, that child benefit should be excluded, and that existing credit commitments indicated distress, finding instead that discretionary spending in the accounts demonstrated capacity to make the loan payments.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website