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

Decision detail

Summary

Ms D complained that Monzo lent to her irresponsibly by providing two loans in 2024 (£5,000 in May and £14,467.94 in December) without conducting sufficiently thorough affordability checks. The ombudsman found that Monzo's checks were not proportionate to the circumstances, particularly given Ms D's three-year history of borrowing through overdraft and flex account and the significant repayment commitments involved. However, upon examining Ms D's bank statements and financial records, the ombudsman concluded that even with more thorough checks, Monzo would have reasonably concluded that Ms D could sustainably afford the repayments, as her actual expenditure aligned with Monzo's estimates and she demonstrated no signs of financial difficulty. The complaint was not upheld and no award was made.

The Ombudsman's reasoning

The ombudsman found that while Monzo's affordability checks were not sufficiently proportionate to the circumstances (particularly given the significant commitment period of over two years and Ms D's existing borrowing history), a proportionate check would have involved independently verifying Ms D's financial circumstances through bank statements or similar evidence. However, upon reviewing Ms D's actual bank statements, the ombudsman concluded that even with better checks, Monzo would have reasonably concluded that Ms D could sustainably afford the repayments. Ms D's actual expenditure was broadly in line with Monzo's statistical estimates, her overdraft use was not unsustainable, and she had no rejected payments. The ombudsman also found no evidence that Monzo should have been aware of Ms D's neurodivergent condition or tailored its approach accordingly.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website