Not upheld: Irresponsible lending complaint against Santander UK Plc

Decision detail

Summary

Mrs S complained that Santander lent irresponsibly when approving a £6,800 loan in September 2024, arguing that the firm failed to conduct sufficient checks and did not consider her vulnerability and financial hardship. Mrs S had a very high debt-to-income ratio of 96% with £78,700 in existing unsecured debt and had opened three new credit accounts in the preceding three months. Although the ombudsman found Santander's checks were not reasonable and proportionate, upon reviewing Mrs S's bank statements, the ombudsman determined that proper checks would have shown she had approximately £600 of disposable income monthly after all commitments, making the loan affordable and sustainable. The ombudsman found no evidence that Mrs S's vulnerability was apparent prior to lending and concluded Santander acted fairly in approving the loan, therefore not upholding the complaint.

The Ombudsman's reasoning

The ombudsman acknowledged that Santander's checks were not reasonable and proportionate given the high debt-to-income ratio, recent account openings, and high existing debt levels. However, upon reviewing Mrs S's bank statements, the ombudsman found that if proper checks had been conducted, they would have revealed Mrs S had approximately £600 of disposable income remaining after all commitments, which would be sufficient to sustainably repay the loan. The ombudsman concluded that the lending was affordable and sustainable, and therefore Santander acted fairly in approving it. The ombudsman also found no evidence that Mrs S's vulnerability or mental health concerns were apparent prior to lending.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website