Not upheld: irresponsible lending - affordability complaint against Tesco Personal Finance Limited (trading as Tesco Bank)

Decision detail

Summary

Miss H complained that Tesco Bank irresponsibly provided her with a £20,000 personal loan in June 2024, arguing it was unaffordable given her existing debt levels. Tesco Bank had obtained Miss H's income, rent, and conducted a credit search showing well-maintained commitments with no adverse information, and the stated loan purpose was debt consolidation. The ombudsman found that Tesco Bank carried out proportionate checks and reasonably relied on the information gathered, which suggested affordability, and that the loan proceeds could clear most of Miss H's existing debts. The complaint was not upheld, though the ombudsman reminded Tesco Bank to exercise forbearance if Miss H experienced future payment difficulties.

The Ombudsman's reasoning

The ombudsman found that Tesco Bank carried out reasonable checks proportionate to the circumstances of a first loan. The credit search showed no adverse information and Miss H's existing commitments were well maintained. The loan was for debt consolidation, and the ombudsman was satisfied that if Miss H used the proceeds as stated, she would be in a better financial position. Even if Tesco Bank had obtained more detailed information about living expenses, this would not have changed the lending decision as it would have reinforced that Miss H could afford the repayments after consolidating her debts.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website