Upheld: irresponsible lending complaint against North Edinburgh and Castle Credit Union Limited trading as Castle Community Bank (CCB)
Financial Ombudsman decision DRN-6352791 of 2026-05-21T00:00:00+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-6352791 |
|---|---|
| Decision date | 2026-05-21T00:00:00+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 calculate total repayments Ms D has made and deduct from the total amount borrowed. If Ms D has overpaid, CCB must refund overpayments plus 8% simple interest per year from the date of overpayment and remove all adverse credit file information. If a capital balance remains outstanding, CCB must arrange an affordable and suitable repayment plan with Ms D, and upon clearance, remove all adverse credit file information. |
Summary
Ms D complained that CCB lent her £8,000 irresponsibly in October 2023 without proper affordability checks. CCB's automated checks revealed Ms D had over £46,000 in debt, 98% revolving credit utilisation, minimal disposable income (under £50 per month), recent new credit cards already maxed out, and an overdraft breach. Although CCB carried out standard automated checks, they had sufficient information to recognise the loan was inappropriate without further investigation. Ms D subsequently defaulted on the loan after struggling to make repayments. The ombudsman upheld the complaint, finding CCB should not have lent given the clear warning signs in Ms D's financial profile, and ordered CCB to refund overpayments with interest or arrange an affordable repayment plan for any remaining capital balance.
The Ombudsman's reasoning
Although CCB carried out automated checks, these were insufficient given the clear warning signs in Ms D's credit profile. CCB already had enough information to know lending was inappropriate without needing further checks. Ms D's debt-to-income ratio of over 89% would exceed 90% with the new loan, her revolving credit utilisation of 98% indicated financial difficulty, she had recently opened new credit cards already maxed out, and she was breaching her overdraft limit. CCB's estimate of disposable income was below their own threshold. Critically, CCB did not make debt consolidation a condition of lending or verify which debts would be repaid, so they could not reasonably rely on this stated purpose. Ms D's bank statements demonstrated she was struggling to manage her existing debt through frequent short-term borrowing. Even if the loan repayments were technically affordable, responsible lending required CCB to recognise the irresponsibility of further lending given her financial circumstances.
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