Not upheld: irresponsible lending / inadequate affordability assessment complaint against Monzo Bank Limited

Decision detail

Summary

Mr K complained that Monzo lent to him irresponsibly by providing four loans between July and September 2024 without adequate affordability checks. The ombudsman found that Monzo's checks were indeed insufficient, particularly given Mr K's January 2024 disclosure of financial difficulties, overdraft usage, and declined payments, as well as his erratic repayment patterns after the first loan. However, the ombudsman concluded that even proportionate checks examining Mr K's bank statements would not have revealed unaffordability, as the statements showed regular declared income, minimal living costs (living with parents), and what appeared to be discretionary overdraft usage. The ombudsman rejected Mr K's later disclosure about gambling-related transactions and attempts to circumvent gambling restrictions, finding these were not apparent from the bank statements and could not have been identified by Monzo without Mr K's disclosure. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while Monzo's affordability checks were insufficient given Mr K's financial history, previous difficulties, and erratic repayment patterns, the key question was whether proportionate checks would have revealed unaffordability. Examining Mr K's bank statements, the ombudsman found regular declared income, minimal living costs (living with parents), and overdraft usage that appeared discretionary rather than necessary. The ombudsman concluded that Mr K's attempts to disguise transactions related to gambling behaviour were not apparent from the bank statements alone and could not reasonably have been identified by Monzo without Mr K disclosing this information. Therefore, proportionate checks would not have shown the loans were unaffordable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website