Not upheld: irresponsible lending and failure to intervene in overdraft use complaint against Santander UK Plc

Decision detail

Summary

Miss S complained that Santander lent to her irresponsibly and failed to intervene when she became reliant on her overdraft. She had held the overdraft for over ten years, with the limit increased to £2,000 in July 2018. The overdraft was interest-free until October 2020, when it moved to standard terms and interest charges began. Miss S sought refunds of all interest and fees paid. The ombudsman considered the complaint under section 140A of the Consumer Credit Act 1974 regarding unfair credit relationships. After examining Miss S's transaction history from 2020 to 2024, the ombudsman found that while she used the overdraft repeatedly, she had sufficient income and savings to repay it within a reasonable period and was choosing to save for a house deposit instead. Santander had adequately monitored the account, communicated costs, and offered support. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied section 140A of the Consumer Credit Act 1974 to assess whether the relationship was unfair. While the overdraft was interest-free until October 2020, no unfairness could exist during that period as Miss S benefited from free borrowing. From July 2020 onwards, Santander had obligations under CONC 5D to monitor for repeat use and signs of financial difficulty. Although repeat use was identified, the transaction history showed Miss S had the financial capacity to repay the overdraft. She was saving for a house deposit, had disposable income of approximately £500 monthly after essential expenses, and could have repaid the overdraft within a reasonable period. The ombudsman found no signs of actual or potential financial difficulty that would have required Santander to intervene beyond the communications it already provided.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website