Upheld: irresponsible lending - failure to conduct adequate affordability checks and failure to review accounts for signs of financial difficulty complaint against Santander Bank Plc / Santander UK Bank Plc
Financial Ombudsman decision DRN-6350401 of 2026-06-08T00:00:00+00:00. irresponsible lending - failure to conduct adequate affordability checks and failure to review accounts for signs of financial difficulty complaint against Santander Bank Plc / Santander UK Bank Plc. Outcome: Upheld.
Decision detail
| Reference | DRN-6350401 |
|---|---|
| Decision date | 2026-06-08T00:00:00+00:00 |
| Firm | Santander Bank Plc / Santander UK Bank Plc |
| Product | Overdraft |
| Claim type | irresponsible lending - failure to conduct adequate affordability checks and failure to review accounts for signs of financial difficulty |
| Outcome | Upheld |
| Remedy | Santander UK Bank Plc must: (1) Rework Miss T's current overdraft balance on account 1 removing all interest, fees and charges from September 2021 onwards; (2) Rework Miss T's current overdraft balance on account 2 removing all interest, fees and charges on balances above £1,000; (3) If an outstanding balance remains, contact Miss T to arrange a suitable repayment plan; (4) Adjust credit file records to reflect what would have been recorded if limits had been reduced from September 2021 on account 1 and backdated to November 2021 on account 2; (5) If adjustments result in overpayments, return them with 8% simple interest from date made until settlement; (6) If no outstanding balance remains, remove adverse credit file information; (7) May reduce overdraft limits by refund amount if appropriate without leaving Miss T over limits. |
Summary
Miss T complained that Santander acted irresponsibly in granting her two personal current account overdraft facilities that were unaffordable. Account 1 was opened in 2017 as a student account with a £250 limit, increased to £2,000 by July 2020, while account 2 was opened in December 2020 with a £200 limit, increased to £1,400 by November 2021. By July 2021, Miss T was using both overdrafts continuously and heavily, had returned direct debits, and was making multiple transfers between accounts to manage limits, indicating financial stress. The Ombudsman upheld the complaint, finding that Santander should have stepped in by September 2021 on account 1 to reduce the limit, and should not have increased account 2's limit to £1,400 in November 2021, given Miss T's low income (under £1,000 per month), existing heavy overdraft usage, and doubled external credit commitments. Santander was ordered to remove all interest, fees and charges from September 2021 on account 1 and above £1,000 on account 2, and to arrange a repayment plan for any remaining balance.
The Ombudsman's reasoning
Santander had a duty to conduct reasonable and proportionate checks before granting overdraft facilities and before each credit limit increase, and to regularly review accounts to ensure overdrafts remained affordable. For account 1, by September 2021, Miss T showed clear signs of financial difficulty through continuous heavy overdraft usage, returned direct debits, and account juggling. Santander should have made further contact attempts and gradually reduced the limit rather than allowing continued heavy usage. For account 2, while the initial £200 facility and July 2021 increase to £1,000 were reasonable given the checks conducted, the November 2021 increases to £1,200 and £1,400 were not sustainably affordable given Miss T's low income (under £1,000 per month), her existing £2,000 overdraft on account 1 which she was using heavily, and her doubled external credit commitments (£4,400).
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Santander Bank Plc / Santander UK Bank Plc, all decisions | 1 | 100% |
| Overdraft, all decisions | 3,791 | 24% |
Source
Read the original decision on the Financial Ombudsman Service website