Not upheld: Irresponsible lending complaint against Bank of Scotland plc (trading as Halifax)

Decision detail

Summary

Miss N complained that Halifax acted irresponsibly by providing an overdraft facility that she could not sustainably afford, with the limit increasing from £50 in November 2020 to £470 by January 2022. An investigator initially upheld the complaint from June 2024 onwards, but the ombudsman issued a provisional decision finding the complaint should not be upheld. Miss N responded arguing the ombudsman should consider the cumulative pattern of her account conduct, including persistent overdraft usage and returned payments. The ombudsman's final decision upheld its provisional findings, concluding that while Miss N's overdraft usage was sustained, her monthly income of £1,500-£1,600 was sufficient to allow gradual reduction of reliance, she had discretionary spending capacity, and Halifax had taken reasonable steps to monitor and communicate about her usage.

The Ombudsman's reasoning

The ombudsman found that while Miss N showed sustained overdraft usage and returned payments, these factors alone did not conclusively demonstrate financial difficulty requiring intervention. The ombudsman considered that Miss N's monthly income of £1,500-£1,600 was more than three times her overdraft limit, she had disposable income for non-essential spending, and she was not taking high-cost short-term borrowing or failing to meet credit commitments. Halifax's initial checks were proportionate, the increases were reasonable, and Halifax took proactive steps to communicate with Miss N about her usage. The ombudsman rejected the argument that factors should be considered cumulatively rather than individually, finding that even in aggregate they did not demonstrate the level of financial difficulty requiring unilateral intervention.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website