Not upheld: Irresponsible lending complaint against Barclays Bank UK PLC (trading as Tesco Bank)

Decision detail

Summary

Miss W complained that Tesco Bank irresponsibly provided her with a £15,600 personal loan in March 2024, arguing it was unaffordable given her existing debt. Tesco Bank obtained Miss W's income details, conducted a credit search showing well-maintained commitments, and noted the loan purpose was debt consolidation. The ombudsman found that Tesco Bank carried out proportionate checks and reasonably relied on the information gathered, which indicated affordability. The loan proceeds were sufficient to clear almost all of Miss W's revolving credit accounts, which would have improved her financial position. The complaint was not upheld, though the ombudsman reminded Tesco Bank to exercise forbearance if Miss W experienced future payment difficulties.

The Ombudsman's reasoning

The ombudsman found that Tesco Bank carried out proportionate checks by obtaining Miss W's income, conducting a credit search, and estimating living expenses using statistical data. The loan purpose was debt consolidation, and the proceeds were sufficient to clear most of her existing debts, which would have improved her financial position. As this was a first loan, Tesco Bank had no reason to anticipate that Miss W would reestablish balances on cleared accounts. The ombudsman concluded that even if Tesco Bank had obtained more detailed information about living expenses, it would not have changed the lending decision, as the consolidation would have left Miss W in a better financial position.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website