The Royal Bank of Scotland Plc · DRN-6061970

The complaint Mr M says that The Royal Bank of Scotland Plc (‘RBS’) provided him with increases to his overdraft that were unaffordable for him. What happened The overdraft was first provided in 2015. It was then increased on five occasions in 2019: in May 2019 it was increased to £6,000. Then in June 2019 it was increased four more times, to £7,000, then £8,000, then £9,000 and finally to £10,000. To be clear, in this decision I am only looking at the six years before Mr M started his complaint. I am therefore able to look at this complaint against the background of this service’s time limit rules and not as an unfair relationship as defined by S140A of the Consumer Credit Act 1974. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. We’ve set out our general approach to complaints about unaffordable or irresponsible lending on our website and I’ve taken this into account in deciding Mr M’s case. I’ve decided to uphold this complaint on the same basis as our investigator. I’ll explain why: • I think the checks RBS did before providing the overdraft limit increase in May 2019 were likely to have been reasonable and proportionate. RBS says it checked his account history, asked him about his income and spending and checked his credit file. He’d recently had some late payments on one credit account but it was now up to date. Similarly, for the four further increases agreed in June 2019, RBS gathered a reasonable amount of evidence about Mr M’s ability to repay. • However, a lending decision needs to be borrower focused. As Mr M was already an RBS customer, RBS was well-placed to look into Mr M’s wider financial situation through access to his bank statements. Based on what we’ve seen about Mr M’s financial situation at the time of the increases, I agree with our investigator that RBS should have picked up on his over-reliance on his overdraft and other lending sources. I can see he was making constant use of his overdraft and at the same time he was borrowing relatively large sums to pay back existing borrowing. He was also taking out short-term high-cost loans and borrowing on his paypal account. This was against a background of very regular gambling transactions on his account, with the likelihood that his borrowing was being used to pay back debt and help fund further gambling. So, I think it’s reasonable to say there was a real risk that his financial circumstances could deteriorate. • Given what I’ve seen, I think RBS’s decision to increase Mr M’s overdraft limit, first in

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May 2019 and then four more times in June 2019, was unfair. RBS ought to have seen there was a likelihood that Mr M would be unable to sustainably repay the increased overdraft. • I will add that I don’t consider that credits made to the account later on by Mr M affect this finding. In making my decision, I have to look at the information that was available, or likely to have been available, to RBS at the time it was dealing with Mr M, rather than relying on hindsight. I’ve considered whether the relationship might have been unfair under s.140A of the Consumer Credit Act 1974. However, I’m satisfied the redress I’m awarding in this case, as set out below, results in fair compensation for Mr M in the circumstances of this complaint. I’m therefore satisfied, based on what I’ve seen, that no additional award would be appropriate in this case. Putting things right RBS shouldn’t have increased Mr M’s overdraft limit to £6,000 on 28 May 2019 or gone on to agree later increases. It therefore needs to do the following: • Re-work Mr M’s overdraft balance so that all interest, fees and charges should be removed from the account for balances above £5,210 going forward from 28 May 2019. AND • If an outstanding balance remains on the overdraft once these adjustments have been made, RBS should contact Mr M to arrange a suitable repayment plan for this. If it considers it appropriate to record negative information on Mr M’s credit file, it should backdate this to 28 May 2019. OR • If the effect of removing all interest, fees and charges results in there no longer being an outstanding balance, then any extra should be treated as overpayments and returned to Mr M, along with 8% simple interest on the overpayments from the date they were made (if they were) until the date of settlement. • If no outstanding balance remains after all adjustments have been made, then RBS should remove any adverse information from Mr M’s credit file. † † HM Revenue & Customs requires RBS to take off tax from this interest. RBS must give Mr M a certificate showing how much tax it’s taken off if he asks for one. My final decision My final decision is that I’m upholding this complaint. The Royal Bank of Scotland Plc must put things right as set up above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr M to accept or reject my decision before 17 April 2026. Michael Goldberg Ombudsman

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