Not upheld: irresponsible lending - overdraft limit increases complaint against MONZO BANK LIMITED

Decision detail

Summary

Miss H complained that Monzo Bank Limited irresponsibly provided her with an overdraft that was increased five times within a week in March 2023, which she argued should have indicated financial strain. Monzo had verified her income at approximately £4,400 per month, confirmed she had no housing costs, estimated her essential living expenses, and conducted credit checks showing no adverse information. The ombudsman found that Monzo's checks were reasonable and proportionate under FCA regulations, and that the lending decisions were fair given Miss H's income exceeded her debt obligations and she showed no signs of financial difficulty at the time. The complaint was not upheld, and no remedy was ordered.

The Ombudsman's reasoning

The ombudsman found that Monzo's checks were reasonable and proportionate to Miss H's circumstances, as permitted by FCA regulations. The checks included income verification via CRAs, housing cost information, statistical estimation of living costs, and credit file review. The lending decisions were fair because Miss H's income significantly exceeded her debt obligations and monthly disposable income was sufficient. The rapid increases were for modest amounts and Miss H showed no signs of financial difficulty at the time, with no missed payments or adverse credit information. The ombudsman rejected the argument that further checks such as income verification or bank statement review were necessary, as the available information did not suggest financial struggle.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website