Santander UK Plc · DRN-6126370

The complaint Santander UK Plc (‘Santander’) first provided Ms L with an overdraft in August 2011. The account was changed from a student to graduate status in July 2015 and then to an everyday current account in July 2018. What happened Ms L says that Santander continued to provide her with the overdraft facility after she’d got into financial difficulties. She says this happened in 2021 and the period she is complaining about starts then. The overdraft limit at this time was £2,000. To be clear, in this decision I am looking only at a timeframe within six years of Ms L starting her 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 Ms L’s case. I’ve decided the overdraft facility wasn’t provided fairly. I’ll explain why. I’ve noted that Ms L made little use of her overdraft facility from September 2020 up to around September 2021 when she began to use it occasionally and only to a limited extent of around £100. This continued until the end of 2021. I haven’t noticed significant signs of financial difficulty during this time. I’ve seen that Ms L began to make more regular use of her overdraft in 2022 up to around September 2022. From October 2022 was using it constantly, going up almost to the overdraft limit in December 2022. However, I think it might have been premature to treat this as evidence of financial difficulty in the account reviews completed between October and December 2022. So I don’t think I could reasonably expect Santander to be alerted to potential financial difficulties. By early 2023 Ms L was again using her overdraft heavily, breaching her overdraft limit in January and also February. So, by the March 2023 review date she would have been using her overdraft heavily for around six months. However, I would not necessarily have expected Santander to actively intervene to reduce her overdraft use based on this level of activity. But by June 2023 - with Ms L having been actively using her overdraft and regularly breaching her overdraft limit over at least a nine-month period – I think there was enough indication to show that Ms L’s financial situation was worsening. I think the fact that she went over her overdraft limit for several months since June 2023 is a real concern. And from what

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I can see about her regular monthly income – in the region of £1,100 - she wasn’t in a position to pull herself back and steadily recover from her high level of overdraft use. She was using the limit of the facility with her usage mainly made up of essential monthly spending and only limited non-essential spending. So I think Santander ought to have picked up on and acted upon the heavy and ongoing overdraft reliance that was happening from mid-2023, with Ms L being stuck in her overdraft and showing a consistently higher level of use, often close to and exceeding the £2,000 overdraft limit. She would also be ‘locked in’ to paying for increasing overdraft charges and interest in circumstances where there looked to be no reasonable prospect of her getting out of her overdraft. I think that’s a concern, even if there weren’t obvious indicators of financial difficulty, such as returned payments or high-cost borrowing, visible when looking at the account transactions. I therefore agree that by June 2023 at the latest, Santander needed to step in to interact directly with Ms L and discuss options with the aim of reducing and if possible, removing her reliance on the overdraft facility. I say this because, even allowing for the credits to the account there wasn’t a realistic prospect that she’d be able to make meaningful inroads towards paying off the overdraft on a sustainable basis. Also, given that the overdraft use showed evidence of her being in significant financial difficulty, I don’t think writing to her from February 2022 was enough to make her aware of her overdraft use and to recognise that help and support was available. And I don’t think that going from letter to email communication in January 2024, plus sending an SMS message, changes that. This all means I don’t think Santander acted fairly in allowing Ms L to continue using her overdraft in this way from June 2023. 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 Ms L 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 – what Santander needs to do In this case, I require Santander to compensate Ms L as set out below. Santander should therefore: • Re-work Ms L’s current overdraft balance so that any additional interest, fees and charges applied from June 2023 onwards are removed. AND • If an outstanding balance remains on the overdraft once these adjustments have been made Santander should contact Ms L to arrange a suitable repayment plan for this. If it considers it appropriate to record negative information on Ms L’s credit file, it should backdate this to June 2023. 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 Ms L, along with 8% simple interest on the overpayments from the

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date they were made (if they were) until the date of settlement. If no outstanding balance remains after all adjustments have been made, then Santander should remove any adverse information from Ms L’s credit file. † † HM Revenue & Customs requires Santander to take off tax from this interest. Santander must give Ms L a certificate showing how much tax it’s taken off if she asks for one. My final decision My final decision is that I’m upholding this complaint in part and so Santander UK Plc must put things right as I’ve set out above. Under the rules of the Financial Ombudsman Service, I’m required to ask Ms L to accept or reject my decision before 24 April 2026. Michael Goldberg Ombudsman

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