Not upheld: Irresponsible lending complaint against Bank Of Scotland plc

Decision detail

Summary

Miss D complained that Bank Of Scotland unfairly applied overdraft charges because she was allowed to use her overdraft for a prolonged period despite showing signs of financial struggle. The investigator recommended upholding the complaint and refunding charges from August 2025 onwards. However, the ombudsman disagreed, finding that while Miss D used her overdraft regularly, this did not constitute financial difficulty given that her account credits exceeded her limit, she had discretionary spending, and could meet commitments without the overdraft. The ombudsman concluded BOS did not lend irresponsibly and that taking corrective action would have been disproportionate, therefore not upholding the complaint.

The Ombudsman's reasoning

The ombudsman found that while Miss D used her overdraft regularly, this alone did not indicate financial difficulty. The key factors were: (1) Miss D's account credits exceeded her overdraft limit, meaning she was not permanently overdrawn; (2) Miss D had discretionary expenditure and was choosing to transfer funds to savings while using her overdraft, suggesting choice rather than necessity; (3) Miss D could meet her commitments without the overdraft; (4) no regulatory indicators of financial difficulty were present; and (5) taking corrective action would have been disproportionate given Miss D had funds to repay the overdraft.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website