Upheld: irresponsible lending complaint against North Edinburgh and Castle Credit Union Limited trading as Castle Community Bank (CCB)
Financial Ombudsman decision DRN-6348456 of 2026-05-11T00:00:00+00:00. irresponsible lending complaint against North Edinburgh and Castle Credit Union Limited trading as Castle Community Bank (CCB). Outcome: Upheld.
Decision detail
| Reference | DRN-6348456 |
|---|---|
| Decision date | 2026-05-11T00:00:00+00:00 |
| Firm | North Edinburgh and Castle Credit Union Limited trading as Castle Community Bank (CCB) |
| Product | loan |
| Claim type | irresponsible lending |
| Outcome | Upheld |
| Remedy | CCB must: (1) rework the account removing all interest, fees and charges; (2) if a credit balance results, refund it to Miss A with 8% simple interest per year from the date of each overpayment to settlement date; (3) if an outstanding balance remains, arrange an affordable repayment plan with Miss A for the original borrowed amount; (4) once Miss A has repaid the original amount lent in full, remove any adverse information recorded on her credit file regarding the agreement. |
Summary
Miss A complained that CCB lent to her irresponsibly when approving a £13,000 loan in June 2025. CCB conducted automated checks and verified Miss A's income at slightly below their calculated minimum requirement of £2,578 monthly, yet approved the loan anyway. Miss A later complained citing mental health difficulties and being trapped in a debt cycle. The ombudsman found that if CCB had conducted proper affordability checks, they would have discovered Miss A's total monthly expenditure (approximately £5,000) already exceeded her income (approximately £4,950) before accounting for the new loan payments, making the repayments unsustainably unaffordable. The complaint was upheld and CCB was ordered to remove all interest and charges, refund any overpayments with interest, and arrange an affordable repayment plan for the original borrowed amount.
The Ombudsman's reasoning
CCB failed to conduct reasonable affordability checks. Although their automated checks identified no recent missed payments or defaults, they calculated Miss A would need £2,578 monthly income but verified only slightly less, yet still approved the loan. The ombudsman found that if CCB had conducted proper checks by requesting further information about Miss A's actual expenditure and debts to be consolidated, they would have discovered her total monthly expenditure (approximately £5,000) already exceeded her income (approximately £4,950) before accounting for the new loan payments. Given the high monthly payment, interest rate, lengthy term, and the nature of her existing creditors, consolidation would not have resulted in meaningful monthly savings. Therefore, CCB could not have fairly decided the repayments would be sustainably affordable.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| North Edinburgh and Castle Credit Union Limited trading as Castle Community Bank (CCB), all decisions | 5 | 40% |
Source
Read the original decision on the Financial Ombudsman Service website