Upheld: Irresponsible lending complaint against Starling Bank Limited
Financial Ombudsman decision DRN-6433464 of 2026-06-17T00:00:00+00:00. Irresponsible lending complaint against Starling Bank Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6433464 |
|---|---|
| Decision date | 2026-06-17T00:00:00+00:00 |
| Firm | Starling Bank Limited |
| Product | Overdraft |
| Claim type | Irresponsible lending |
| Outcome | Upheld |
| Remedy | Starling Bank must rework Miss H's current overdraft balance to remove all interest, fees and charges applied since October 2023. If a balance remains, Starling Bank must arrange a suitable repayment plan and remove adverse credit file information once cleared. If removing charges results in an overpayment, the excess must be returned to Miss H with 8% simple interest from the date made until settlement, and any adverse credit file information must be removed. Starling Bank must deduct tax from the interest as required by HMRC. |
Summary
Miss H complained that Starling Bank provided her with a £500 overdraft facility in October 2022 without appropriate checks and continued to provide it despite her relying on it fully each month. The ombudsman found that while the initial lending decision was fair, Starling Bank failed to conduct required periodic monitoring of the overdraft. By October 2023, Miss H's transaction history showed compulsive gambling spending (over £3,000 in some months with over 100 transactions monthly) representing a large portion of her income, which should have triggered a review and intervention. The ombudsman determined that had Starling Bank reviewed the account and asked about her financial circumstances, they would have realised the overdraft was unsustainable and not responsible to continue providing. The ombudsman upheld the complaint and ordered Starling Bank to remove all interest, fees and charges applied since October 2023 from Miss H's overdraft balance.
The Ombudsman's reasoning
The ombudsman found that while the initial overdraft decision in October 2022 was fair, Starling Bank failed to conduct appropriate periodic monitoring as required by regulations. By October 2023 (one year after the initial lending decision), Miss H's overdraft usage patterns showed clear signs of compulsive gambling spending representing a large portion of her income. The ombudsman determined that regulations require firms to periodically monitor overdraft usage to identify signs of repeat use and financial difficulties, and that a review should have occurred at least one year after the initial lending decision. Had Starling Bank reviewed the account and asked about Miss H's wider financial circumstances, they would have discovered her unsustainable usage pattern and realised it was not responsible to continue providing the facility. The fact that Miss H remained within her limit and received support from other sources did not make continued provision of the overdraft responsible.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Starling Bank Limited, all decisions | 1,021 | 25% |
| Irresponsible lending, all decisions | 30,675 | 37% |
| Overdraft, all decisions | 3,695 | 24% |
Source
Read the original decision on the Financial Ombudsman Service website