DRN-6307336

The complaint Mr U is unhappy HSBC UK Bank Plc provided him with four loans which he says were unaffordable. What happened Mr U successfully applied for the following four loans with HSBC: • Loan one in November 2011 for £7,500. This was due to be repaid in 24 monthly instalments of around £344. This loan was settled early and in full with some of the proceeds from loan two in December 2012. • Loan two in December 2012 for £10,000. This was due to be repaid in 36 monthly instalments of around £320. This loan was settled early and in full with some of the proceeds from loan three in December 2013. • Loan three in December 2013 for around £15,000 to £20,000 (the evidence provided is unclear). This was due to be repaid in 60 monthly instalments of around £355. This loan was settled early and in full with some of the proceeds from loan four in April 2015. • Loan four in April 2015 for £18,290. This was due to be repaid in 60 monthly instalments of around £408. The loan was completed in November 2020. In July 2025, Mr U complained to HSBC that these loans were unaffordable and were granted during a time of financial pressure. HSBC didn’t uphold his complaint, explaining that although they had limited recorded in relation to the applications, they were satisfied a full affordability assessment would have been carried out on each occasion. Mr U wasn’t happy with HSBC’s response, so he referred his complaint to the Financial Ombudsman. One of our investigators looked at the complaint and said it could reasonably be considered as being about an unfair credit relationship as described in Section 140A of the Consumer Credit Act 1974 (“Section 140A”). That being so, they felt it had been referred in time and went on to consider the merits of the complaint. Having done so however, they didn’t uphold it. They later issued a second opinion explaining that they couldn’t look at loans one to three and, on this occasion again, didn’t uphold the complaint about loan four. Mr U didn’t agree with the opinion of the investigator. He didn’t think the income and expenditure assessment was accurate and maintained he had very little to no disposable income. Because an agreement couldn’t be reached, the complaint has been passed to me to decide. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and

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reasonable in the circumstances of this complaint. Having done so, I’m not upholding Mr U’s complaint. I know this is likely to be disappointing for him, so I’ll explain the reasons for my decision. There are time limits for referring a complaint to the Financial Ombudsman Service, and NatWest think this complaint was referred to us too late. Our investigator explained in their initial view why they didn’t, as a starting point, think we could look at a complaint about the lending decisions that happened more than six years before the complaint was made. But they also explained why it was reasonable to interpret the complaint as being about an unfair relationship as described in Section 140A and why this complaint about an allegedly unfair lending relationship had been referred to us in time. For the avoidance of doubt, and especially because the investigator changed their mind in their second view, I agree with our investigator’s initial view that I have the power to look at the whole complaint on this basis. All four loans were part of a consolidation chain which ended when loan four closed in November 2020 – and Mr U complained within six years of the relationship ending. I think this complaint can reasonably be considered as being about an unfair relationship as Mr U said the loan repayments were unaffordable. This may have made the relationship unfair as he said it ultimately led to increased debt, financial difficulty and long-term consequences including a default recorded on his credit file. I acknowledge HSBC still don’t agree we can look at this complaint, but as I don’t think it should be upheld, I don’t intend to comment on this further. Given what Mr U has complained about, I need to consider whether HSBC’s decision to lend to him, or their later actions, created unfairness in the relationship between him and HSBC such that they ought to have acted to put right the unfairness – and if so whether they did enough to remove that unfairness. Mr U’s relationship with HSBC is therefore likely to be unfair if they didn’t carry out proportionate affordability checks and doing so would have revealed their lending to be irresponsible or unaffordable, and if they didn’t then remove the unfairness this created somehow. 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 U’s case. Did HSBC carry out reasonable and proportionate checks? Due to the passage of time, HSBC don’t hold any affordability or credit check information for any of the loans. As these lending decisions all took place by April 2015, I don’t find it surprising that HSBC no longer hold details of the checks they carried out at the time. Businesses are not obliged by law or good industry practice to hold information indefinitely - generally they only do so for six years or so. But without the information, I can’t reasonably say that HSBC carried out reasonable and proportionate checks for any of these lending decisions. What would proportionate checks have shown? In order to try to understand what HSBC might have found had they done proportionate checks, our investigator asked Mr U for copies of his bank statements from the time. That’s not to say that HSBC ought to have reviewed them, but they would give us an understanding of his financial situation at the time.

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Mr U also provided copies of his credit report dating back to March 2016 and July 2020 which I’ve also reviewed. Loan one Having looked at the credit reports provided by Mr U, I can see that he’d defaulted on two accounts in July 2011 – only four months before the loan was approved. So, there was an indication that Mr U had recently struggled financially. And whilst I’m not persuaded this automatically means HSBC shouldn’t have lent to Mr U, I’m satisfied it supports that they ought to have reviewed his financial circumstances. The credit report also suggests that Mr U had no other lending at the time of the loan application, other than an overdraft facility with HSBC - although the limit at time is unknown. Looking at Mr U’s statements for the three months leading up to HSBC approving the loan, I can see he was earning around £2,862 per month. I noted a rent payment of around £1,530 in August 2011 however this payment doesn’t appear in the September or October 2011 statements. I can’t see that Mr U ever relied on his overdraft during this period and there were no obvious signs of financial difficulty. Overall, Mr U’s expenditure during these months appears limited and it’s likely this wasn’t his main account, as I saw multiple transfers to other accounts in his name. Our investigator asked Mr U if he could provide statements for these accounts, but he was unable to – which isn’t surprising given the time elapsed. But without any contemporaneous evidence of his financial situation at the time, I can’t reach any firm conclusion regarding the fairness of the decisions to lend. And so, I can’t reasonably conclude that HSBC acted unfairly when they agreed to lend to Mr U. Loan two Mr U’s credit report shows Mr U still didn’t have any other lending other than an overdraft with HSBC but he’d defaulted on a further account in February 2012 – 10 months before loan two was approved. Again, I’m not persuaded this automatically means HSBC shouldn’t have lent to Mr U, but I’m persuaded it supports that they ought to have reviewed his financial circumstances. In the three months leading up to HSBC approving the loan, Mr U was earning around £2,780 per month. On this occasion again, I was unable to identify any clear expenditure other than regular transfers to Mr U’s partner labelled ‘home’, which I think is reasonable to assume were to cover Mr U’s share of rent and/or household bills. These totalled, on average, around £1,200 per month. I also noted he was overdrawn over most of the period. Mr U continued to make regular transfers to his other accounts, and I understand he’s told us that he would use this money to pay for his personal credit cards. However, I’ve not seen in Mr U’s credit report that he had any credit cards at the time. In any event, without any further evidence about his financial situation at the time, I can’t reasonably conclude his overdrawn position was due to financial difficulties. And so, I’m not persuaded HSBC acted unfairly on this occasion either. Loan three

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Mr U’s credit report didn’t show any new defaults, and only one new credit card account with a low limit of £250. No adverse information was reported in relation to this account. Looking at Mr U’s bank statements, I can see his circumstances remained roughly the same in the lead up to loan three being approved. He earnt around £2,700 per month and the regular expenditure I was able to identify (transfers to his partner, phone bills, overdraft costs and credit card repayments) was around £1,700 per month. I noted he was overdrawn again for most of the period but as I explained above, without further information about his financial circumstances at the time, I can’t reasonably conclude he was in financial difficulty. Loan four Once again, Mr U’s credit report didn’t show any new defaults, and an additional credit card account had been opened with a balance of around £3,800. No adverse information was reported in relation to both credit card accounts. Looking at the bank statements, Mr U’s circumstances appeared to have improved in the lead up to loan four being approved – in so far as his HSBC account is concerned. His income was still around £2,700 but he appeared to be less reliant on his overdraft and often saw a healthy balance. This appears to be due to additional payments from his employer, which Mr U confirmed were reimbursements for work expenses he’d incurred. Overall, I’ve still reached the same conclusion as above – that without further information and evidence about Mr U’s financial situation, I simply can’t reasonably conclude that HSBC acted unfairly when they agreed to lend to him. I’m very sympathetic to Mr U’s situation and I can see he’s gone through a lot of effort to provide documentation from over 15 years ago. But we are an impartial and evidence-based service and so I can’t agree that a business lent unfairly without the evidence to support this. I appreciate Mr U feels very strongly about this matter and I know this isn’t the outcome he hoped for. But for the reasons above, I’m not asking HSBC to do anything to put things right. My final decision For the reasons I’ve outlined above, I’m not upholding Mr U’s complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr U to accept or reject my decision before 26 May 2026. Amelie Makris Ombudsman

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