Not upheld: irresponsible lending - overdraft affordability complaint against Santander UK Plc

Decision detail

Summary

Miss K complained that Santander provided her with an overdraft that was unaffordable, with the limit ranging from £100 to £800 between September 2021 and August 2023. An FOS investigator upheld the complaint, but the ombudsman reversed this decision. The ombudsman found that Santander's lending checks were reasonable and proportionate, based on Miss K's account turnover, external debt levels, and credit reference agency data. Although Miss K was a repeat overdraft user, the ombudsman determined that her overall financial position—including sufficient income to clear the overdraft, discretionary spending, and absence of being locked into the facility—demonstrated she was not in financial difficulty. The ombudsman concluded that Santander acted fairly in increasing the overdraft limit and renewing the facility, and that their monitoring and correspondence about repeat use met regulatory expectations.

The Ombudsman's reasoning

The ombudsman applied the FCA's CONC requirements for proportionate lending checks and fair lending decisions. The key reasoning was that while Miss K was a repeat overdraft user, this alone does not establish financial difficulty. The ombudsman examined Miss K's overall financial position, including her income, expenditure, ability to clear the overdraft, and absence of signs of being locked into the overdraft. The returned direct debits were explained by benefit payment timing rather than inability to pay. The presence of discretionary spending and sufficient income to clear the overdraft within a reasonable timeframe indicated Miss K was not reliant on the overdraft. Santander's monitoring and correspondence about repeat use met regulatory expectations.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website