Not upheld: irresponsible lending and unfair overdraft charges complaint against The Royal Bank of Scotland Plc (RBS)

Decision detail

Summary

Mrs M complained to RBS in April 2025 about overdraft charges applied to her current account since March 2007, claiming she was locked into paying charges she could not afford. RBS rejected the complaint citing time limits and lack of wrongdoing. The ombudsman assessed the complaint under section 140A of the Consumer Credit Act 1974 as concerning an unfair lending relationship. The ombudsman found that RBS's initial lending decisions were not irresponsible, as there was no evidence of adverse credit information or obvious unaffordability. Regarding continued use of the overdraft, the ombudsman found that RBS was not required to take corrective action because Mrs M did not notify RBS of financial difficulty, her account activity did not objectively demonstrate financial hardship according to regulatory guidance, she had sufficient incoming credits and access to joint account funds, and her discretionary spending suggested she was choosing to use the overdraft. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied section 140A of the Consumer Credit Act 1974 to assess whether the lending relationship was unfair. For the initial lending decisions, the ombudsman found no evidence of irresponsible lending given the lack of adverse credit information and the revolving nature of the facility. For the continued use of the overdraft, the ombudsman found that RBS was not required to take corrective action because: (1) Mrs M did not notify RBS of financial difficulty; (2) account activity did not objectively demonstrate financial difficulty according to regulatory guidance; (3) Mrs M had sufficient incoming credits to clear the overdraft; (4) Mrs M had access to funds in a joint account; and (5) discretionary spending suggested Mrs M was choosing to use the overdraft rather than being forced to rely on it.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website