Not upheld: Irresponsible lending complaint against Barclays Bank UK PLC

Decision detail

Summary

Mr W complained that Barclays lent to him irresponsibly and created an unfair credit relationship by failing to consider his reliance on the overdraft and his inability to afford it. He sought refunds of all interest and charges plus compensation. Barclays initially rejected the complaint as out of time, but the ombudsman found it could be considered under section 140A of the Consumer Credit Act 1974. After detailed analysis of Mr W's account performance from April 2021 onwards, the ombudsman found that Mr W had approximately £750 per month disposable income after committed expenditure and could have repaid the £1,925 overdraft in a reasonable period if he wished. The ombudsman concluded that Mr W's regular overdraft use appeared discretionary rather than necessary, and that Barclays had taken appropriate steps by writing to him ten times offering support. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied section 140A of the Consumer Credit Act 1974 to assess whether the credit relationship was unfair. The key analysis focused on whether Barclays carried out reasonable and proportionate affordability checks and whether Mr W could repay the overdraft in a reasonable period. The ombudsman found that Mr W had sufficient disposable income (approximately £750 per month after committed expenditure) to repay the £1,925 overdraft in a reasonable timeframe. The fact that Mr W made discretionary gifts to charities and third parties demonstrated he was not in financial difficulty. The ombudsman noted that Barclays took appropriate steps by writing to Mr W ten times offering support, and Mr W's failure to respond did not indicate unfair treatment by the bank. The ombudsman concluded that Mr W could have reduced or stopped using the overdraft if he wished, and his use appeared to be a choice rather than a necessity.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website