Upheld: irresponsible lending complaint against TSB Bank plc
Financial Ombudsman decision DRN-6357836 of 2026-05-22T00:00:00+00:00. irresponsible lending complaint against TSB Bank plc. Outcome: Upheld.
Decision detail
| Reference | DRN-6357836 |
|---|---|
| Decision date | 2026-05-22T00:00:00+00:00 |
| Firm | TSB Bank plc |
| Product | loan |
| Claim type | irresponsible lending |
| Outcome | Upheld |
| Remedy | TSB Bank must: (1) add up total repayments Mrs H has made and deduct from the total amount borrowed; (2) if Mrs H overpaid, refund the difference plus 8% simple interest from date of overpayment; (3) remove all adverse credit file information if overpaid; (4) if capital balance remains, arrange an affordable payment plan and remove adverse information once cleared; (5) not charge any interest or charges under the credit agreement. |
Summary
Mrs H complained that TSB Bank plc irresponsibly lent her £31,098.92 in September 2023, with approximately £23,198.92 used to repay a previous TSB loan and the remainder for home improvements. TSB Bank conducted affordability checks but relied on third party data to estimate Mrs H's expenses rather than conducting further proportionate checks despite having access to her account statements. Analysis of Mrs H's financial position showed monthly income of £2,800 against total commitments of approximately £2,655 (regular expenses, credit commitments, and deferred payments), leaving insufficient margin for the new loan repayments. The ombudsman upheld the complaint, finding the loan was irresponsibly lent, and ordered TSB Bank to remove interest and charges, refund any overpayments with interest, and arrange an affordable payment plan for any remaining balance.
The Ombudsman's reasoning
The ombudsman found that TSB Bank's affordability checks were not reasonable and proportionate given the size of the loan and what the bank knew about Mrs H's financial situation. The bank relied on third party data to estimate costs rather than conducting further checks, despite having access to Mrs H's account statements. Analysis of those statements showed that Mrs H's total monthly commitments (expenses plus credit payments plus deferred payments) left insufficient margin against her declared income to sustainably afford the new loan repayments of £688.51 per month over the loan term.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| TSB Bank plc, all decisions | 3,565 | 26% |
Source
Read the original decision on the Financial Ombudsman Service website