Upheld: Irresponsible lending complaint against Santander UK Plc
Financial Ombudsman decision DRN-6443915 of 2026-06-30T00:00:00+00:00. Irresponsible lending complaint against Santander UK Plc. Outcome: Upheld.
Decision detail
| Reference | DRN-6443915 |
|---|---|
| Decision date | 2026-06-30T00:00:00+00:00 |
| Firm | Santander UK Plc |
| Product | Personal loan |
| Claim type | Irresponsible lending |
| Outcome | Upheld |
| Remedy | 1. Remove all interest, fees and charges applied to the loan and treat any payments made by Miss B as payments towards the capital amount of £20,000. 2. If Miss B has paid more than the capital, refund overpayments with 8% simple interest from date paid to settlement. 3. If an outstanding balance remains, Santander must come to a reasonable repayment plan with Miss B. 4. Remove any adverse information about the loan from Miss B's credit file if the loan is paid off; if a balance remains, adverse information may remain on the credit file. 5. Pay £200 compensation directly to Miss B for distress and inconvenience caused by delayed and incorrectly sent Final Response Letter. |
Summary
Miss B complained that Santander lent to her irresponsibly when she could not afford a £20,000 loan taken out in November 2024. Santander had received distressed calls from Miss B on 12 and 30 September 2024 in which she stated she was unemployed and unable to make her existing mortgage and loan repayments, yet Santander approved the new loan five weeks later without verifying her income. Although Miss B declared income of £4,000 per month, bank statements showed no regular employment income after June 2024, only temporary lodger payments and later Universal Credit of approximately £400 per month—insufficient to cover the £2,851 monthly expenditure Santander calculated. The ombudsman upheld the complaint, finding Santander failed to conduct proportionate checks and should have declined the loan. Santander was also found to have mishandled Miss B's complaint, initially losing it and failing to send the Final Response Letter by email as requested. The ombudsman directed Santander to remove all interest, fees and charges, treat payments as capital repayment, establish a reasonable repayment plan for any remaining balance, and pay £200 compensation for complaint handling failures.
The Ombudsman's reasoning
Santander failed to carry out proportionate creditworthiness checks as required by FCA rules on responsible lending. Although Santander carried out a credit check, it did not verify Miss B's income despite having clear system alerts that she was unemployed and in financial distress just five weeks before the application. The ombudsman found that Santander was on notice of Miss B's joblessness from the September 2024 calls and should have either requested payslips, spoken to her directly, or reviewed her bank statements—all simple checks that would have revealed her actual income was insufficient. Bank statement analysis showed no regular employment income after June 2024, only temporary lodger payments and later Universal Credit of approximately £400 per month, far below the £2,851 monthly expenditure Santander calculated as necessary. The ombudsman rejected Santander's argument that it only needed to follow its internal processes, holding that the FOS must assess whether checks were proportionate under the regulatory framework. Additionally, Santander's complaint handling was deficient, with the initial complaint lost, delays in issuing the Final Response Letter, and failure to send correspondence by email as requested by Miss B.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Santander UK Plc, all decisions | 14,522 | 22% |
| Irresponsible lending, all decisions | 30,770 | 37% |
| Personal loan, all decisions | 22,885 | 29% |
Source
Read the original decision on the Financial Ombudsman Service website