Barclays Bank Uk Plc · DRN-6214476

The complaint Mr W complains that Barclays Bank Uk Plc (Barclays) acted irresponsibly by lending to him. What happened Around January 2022 Mr W entered into a Fixed Sum loan agreement with Barclays for £4,400. After interest and charges were applied the total amount repayable was £5535 over 60 months at £92.25 a month. Mr W refinanced this loan with another Fixed Sum loan agreement around May 2022 for £7,000. This second loan was refinanced around October 2022 when Mr W entered into a third Fixed Sum loan agreement for £10,600. This loan was settled around November 2023. Around March 2024 Mr W entered a fourth Fixed Sum loan agreement with Barclays for £28,000. After interest and charges were applied the total amount he needed to repay was £36,483.84, over 72 months at £506.72. Around October 2024 Mr W entered into a fifth Fixed Sum loan agreement for £1,500. After interest and charges were applied the total amount repayable was £2,068.80 over 60 months at £34.38 a month. Mr W complained to Barclays saying they hadn’t sufficiently checked whether he could sustain the repayments for all the loans. And by not properly checking they’d caused him to spiral into debt. Barclays said their checks were reasonable and proportionate. And based on these checks Mr W had sufficient disposable income to sustain the repayments. They said their lending decision(s) were fair. Mr W wasn’t happy with Barclays response and referred his complaint to us. Our investigator said Barclays checks were reasonable and proportionate but for Loan One they showed Mr W had insufficient disposable income to sustain the repayments, so didn’t agree that Barclays had made a fair decision. And as Loan Two and Three were refinancing loans by extension Barclays shouldn’t have agreed to these loans either. He asked Barclays to put things right. For Loan Four and Loan Five our investigator said Barclays checks were reasonable and proportionate. Based on these checks, considering Loan Four was for debt consolidation, Mr W’s existing external debt should have reduced his monthly commitments, which meant he should have had sufficient disposable income to sustain the repayments. He said Barclays decision to lend to Mr W was fair. Mr W didn’t agree that Barclays had lent fairly for Loan Four and asked for an ombudsman to decide. 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.

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We’ve set out our approach to complaints about irresponsible and unaffordable lending on our website – including the key relevant rules, guidance, good industry practice and law. I’ve considered this approach when deciding this complaint. Whilst I’ve carefully thought about everything that has been said and provided by both parties, I won’t comment on everything in my decision. This is not intended as a discourtesy to either party, but it reflects the informal nature of this service in resolving disputes. Our investigator said Loan One, Two and Three had been lent irresponsibly and explained his reasoning for this to each party to the complaint, which I’m satisfied with. And I note that Mr W and Barclays have both accepted this part of our investigator’s outcome. Mr W also accepted that Loan Five had been fairly lent. So, I don’t therefore propose to discuss these loans in detail further as they are no longer in dispute, so I’ll instead focus on the remaining loan still being disputed, Loan Four. Barclays needed to carry out reasonable and proportionate checks to ensure they didn’t lend to Mr W irresponsibly. I think there are key questions I need to consider deciding what is fair and reasonable in the circumstances of this complaint: 1. Did Barclays carry out reasonable and proportionate checks to satisfy themselves that Mr W could sustainably repay the loans? a. If they did was their decision to lend fair based on these checks b. If not, what would reasonable and proportionate checks have shown at the time? 2. Did Barclays act unfairly or unreasonably towards Mr W in some other way? Barclays had to carry out reasonable and proportionate checks to satisfy themselves Mr W would be able to repay the loan sustainably. It’s not just about the lender assessing the likelihood of the loan being repaid, they also had to consider the impact of the loan repayments on Mr W. There isn’t a set list of checks that a lender had to do, but they could consider several different things such as the amount and length of the loan, the amount of the monthly repayments and the overall circumstances of the borrower. The relevant guidance says a lender must base their creditworthiness assessment on sufficient information of which they’re aware at the time the assessment is carried out, obtained, where appropriate, from the consumer and where necessary from a credit reference agency (CRA). And the information must enable the lender to carry out a reasonable creditworthiness assessment. A lender should take reasonable steps to estimate a consumer’s income and non- discretionary spending. And that it’s not generally sufficient to rely solely on a statement of current income made by the consumer without independent evidence such as from a CRA or third party. Barclays have provided their creditworthiness assessment. This showed that Mr W had declared a monthly income of £4,370, Barclays cross checked this with a CRA and used the lower amount of £4,000 which I think is reasonable. The credit check showed Mr W’s existing credit commitments for loans and credit cards amounted to £1,342. For his non- discretionary expenditure for his mortgage, council tax, and utilities Barclays assessed this to be £931 a month. And for his other non-discretionary expenditure including consideration for Mr W having dependents £1,086 a month. In total they assessed Mr W’s non-

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discretionary outgoings to be £3,359 before considering any debts that would be consolidated. As the purpose of the loan was for debt consolidation, Mr W’s credit commitments would have reduced. I accept Mr W may not have gone on to clear his existing balances with this loan. But Barclays could only make a reasonable decision based on the information they had available at the time. In my view, all Barclays could do was take reasonable steps to ensure the payments would be affordable for Mr W. I think they were reasonably entitled to believe the funds would be used for the stated purpose. And Barclays has shown that from the loan funds Mr W settled a loan with a payment of £24,954.10 and paid £3,000 towards a credit card balance. This would have reduced Mr W’s external debt by at least £530 (his loan repayment alone was £530.39 a month). So, upon consolidation, after factoring in the new loan amount Mr W should have had around £664 at least, which could reasonably be considered sufficient to cover any remaining day to day living, discretionary and unexpected costs. Barclays checks also showed how Mr W was managing his credit, and these checks showed no evidence of any adverse information such as missed payments, arrears, defaults or county court judgments. While the ability to repay credit without issue doesn’t mean that there isn’t financial distress. A good repayment history is a fairly reliable indicator that an individual can manage debt responsibly. And the opposite is also usually the case, if credit is unaffordable this is usually demonstrated by a problematic repayment history, either to the credit or other bills. So, I’m satisfied Barclays checks for Loan Four were reasonable and proportionate as they’d validated Mr W’s income and taken reasonable steps to determine his non-discretionary outgoings. Mr W was managing his active accounts with no signs of financial vulnerability. So, I don’t think that there was anything immediately obvious in the information that Barclays had which meant they shouldn’t rely on it. And based on these checks Mr W should have had sufficient disposable income to sustain the repayments. I appreciate my decision about this loan will disappoint Mr W but I hope he finds reassurance as to why I’ve reached the decision I have. While I’m not upholding Mr W’s complaint about Loan Four and Five, I’d like to remind Barclays of their obligation to exercise forbearance if they intend to collect any outstanding balance remaining on these accounts. And it’s the case that Mr W is experiencing financial difficulty. I’ve also considered whether Barclays acted unfairly or unreasonably in some other way given what Mr W has complained about, including whether their relationship with him might have been viewed as unfair by a court under Section 140A Consumer Credit Act 1974. But I’m satisfied the redress I’ve directed below results in fair compensation for Mr W in the circumstances of his complaint. I’m satisfied, based on what I’ve seen that no additional award would be appropriate in this case. Putting things right When a business has done something wrong, which Barclays has accepted they have for Loan One, Two and Three I’d normally direct that business to put the complainant in the position they would be in now if the mistake hadn’t happened, as far as is reasonably practical. But Mr W was given the loans, used the money and has already repaid the entire amount including interest due under the agreements. While I think it is fair for Mr W to repay

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the money he borrowed, I don’t think he should be disadvantaged by Barclays decision to lend by having to pay any interest and charges that have been applied to these loans. My final decision So I partially uphold this complaint. And ask Barclays Bank UK PLC trading as Barclays to: • Add up the total repayments Mr W has made towards Loan One, Two and Three, and deduct these from the total amount of money he received. • If this results in Mr W having paid more than he received, any overpayments should be refunded along with *8% simple interest (calculated from the date the overpayments were made until the date of settlement). And • Remove any adverse information that may have been added to Mr W’s credit file about each of these loans. *His Majesty’s Revenue & Customs requires Barclays to deduct tax from any award of interest. It must give Mr W a certificate showing how much tax has been taken off if he asks for one. If they intend to apply the refund to reduce an outstanding balance, they must do so after deducting the tax. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr W to accept or reject my decision before 8 April 2026. Anne Scarr Ombudsman

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