Not upheld: irresponsible lending and failure to appropriately monitor account complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr and Mrs R complained that HSBC lent to them irresponsibly and failed to appropriately monitor their overdraft account, leading to reliance on the overdraft for essential costs. HSBC held an overdraft from at least 2016 (£2,950) which increased to £3,900 in November 2019. The ombudsman considered the complaint under Section 140A of the Consumer Credit Act 1974 regarding unfair credit relationships. While HSBC lacked evidence of early lending checks due to the passage of time, the 2019 limit increase was supported by reasonable checks including credit search and income verification. The ombudsman found that despite regular overdraft use, account statements showed sufficient monthly disposable income (£2,000-£5,000) to repay the overdraft over a reasonable period, with no clear signs of financial difficulty. HSBC appropriately contacted Mr and Mrs R about overdraft usage from 2020 onwards. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied Section 140A of the Consumer Credit Act 1974 regarding unfair credit relationships. For the 2019 limit increase, HSBC's checks were reasonable given the credit search, declared income, and account turnover supported the increase, despite regular overdraft use. For ongoing monitoring, while HSBC should have contacted customers about prolonged overdraft use from 2020 onwards, the account showed sufficient disposable income (£2,000-£5,000 monthly after essential expenses) to repay the overdraft over a reasonable period. The ombudsman found no clear signs of financial difficulty and noted Mr and Mrs R had opportunities to repay when the account held credit balances. HSBC's communications about overdraft usage were reasonable and proportionate given the lack of financial distress indicators.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website