Upheld: Irresponsible lending complaint against Santander UK Plc
Financial Ombudsman decision DRN-6454446 of 2026-06-25T00:00:00+00:00. Irresponsible lending complaint against Santander UK Plc. Outcome: Upheld.
Decision detail
| Reference | DRN-6454446 |
|---|---|
| Decision date | 2026-06-25T00:00:00+00:00 |
| Firm | Santander UK Plc |
| Product | Overdraft |
| Claim type | Irresponsible lending |
| Outcome | Upheld |
| Remedy | Santander must re-work Miss L's overdraft balance to remove all interest, fees and charges applied from February 2023 onwards. If a balance remains, Santander should arrange a suitable repayment plan and may backdate negative credit file information to February 2023. If removing charges results in overpayments, these should be returned to Miss L with 8% simple interest per year from the date made until settlement, and any adverse credit file information should be removed. |
Summary
Miss L complained that Santander irresponsibly continued to provide an overdraft facility when she was in financial difficulty. The overdraft was increased to £3,800 in 2019 and Miss L's account was largely in overdraft from 2018. Her circumstances changed in mid-2020 due to COVID-19, with income declining and benefit income commencing. Santander engaged with Miss L in 2020-2021 and provided support by capping overdraft charges in late 2021, saving her over £50 monthly. However, from March 2022 to February 2023, Miss L had over 30 returned direct debits including priority debts, and her balance remained at the higher limit level. The ombudsman upheld the complaint, finding that Santander should not have renewed the overdraft on the same terms from February 2023, as the previous support had not changed her pattern of use and clear signs of financial difficulty were evident. Santander must remove all interest, fees and charges from February 2023 onwards and arrange appropriate repayment terms.
The Ombudsman's reasoning
The ombudsman found that while Santander acted fairly up to February 2022 by engaging with Miss L and providing cost mitigation through capped charges, it failed to act fairly from February 2023 onwards. The regulatory rules under CONC 5D.1.2G(3) require taking appropriate steps to change patterns of repeat overdraft use. By February 2023, it was clear that Santander's previous support had not positively changed Miss L's pattern of use, and the evidence showed her overdraft use was due to financial difficulties (evidenced by returned priority debt payments) rather than mismanagement. Santander took no further action beyond annual correspondence, which was insufficient given the worsening financial position. The ombudsman rejected Santander's argument that it could not reduce the limit without causing harm, noting that reducing the limit was not the only action available.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Santander UK Plc, all decisions | 14,502 | 22% |
| Irresponsible lending, all decisions | 30,675 | 37% |
| Overdraft, all decisions | 3,695 | 24% |
Source
Read the original decision on the Financial Ombudsman Service website