Barclays Bank UK PLC · DRN-6279701

The complaint Mr K complains that Barclays Bank UK PLC trading as Tesco Bank lent irresponsibly when it approved a loan application. What happened Mr K has explained that in late December 2023 he fell victim to a cruel scam. On 14 December 2023, Mr K applied for a home improvement loan of £20,000 with Tesco Bank. In his application, Mr K said he was employed with a monthly income of £2,400 and a was homeowner with a mortgage payments of £350. Tesco Bank verified Mr K’s income level by completing a demographic check and received a positive result. A credit search found Mr K had two open accounts without a balance on his credit file in addition to his mortgage of £69,000. Mortgage repayments of £398 were found and a figure of £350 was used in the affordability assessment in line with the information Mr K gave in the application. An affordability assessment was completed that used an estimate of £552 a month for Mr K’s general living expenses. Tesco Bank has confirmed the figure was obtained from statistical data provided by the Office for National Statistics (ONS). Mr K’s income and mortgage payments were also taken into account. Tesco Bank reached the view Mr K had a disposable income of around £1,010 a month after his existing outgoings and new loan payment of £487.17 were met. Tesco Bank approved Mr K’s loan application and the funds were issued. More recently, representatives acting on Mr K’s behalf complained that Tesco Bank lent irresponsibly. They explained that Mr K had applied for a loan of £15,000 with a lender I’ll refer to as M the day before his Tesco Bank application was made. They also advised Mr K had successfully obtained three other loans, totalling £58,000, in the week following his Tesco Bank loan approval. The loan funds were ultimately lost due to a scam. Mr M complained to Tesco Bank. Tesco Bank issued a final response and said it had carried out the relevant lending checks when assessing Mr K’s application. Tesco Bank also said that as there were no affordability concerns and Mr K appeared to be in a strong financial position, it didn’t find a reason to complete additional lending checks. Tesco Bank said there was no reasonable way for it to have identified Mr K had fallen victim to a scam or that he was vulnerable at the time. An investigator at this service looked at Mr K’s complaint. They thought Tesco Bank completed proportionate checks when looking at Mr K’s application and that its decision to lend was reasonable based on the information it obtained. The investigator said the new loan with M wouldn’t have shown on Mr K’s credit file the following day and there was no evidence to show he had other new loans when his Tesco Bank application was made. Mr K’s representatives asked to appeal and said his credit file results from Tesco Bank showed three searches in the previous six months but there was no obvious reason why they had been completed. Mr K’s representatives felt this deserved further inquiry by Tesco

-- 1 of 4 --

Bank. They added the searches indicated Mr K was actively seeking credit elsewhere. Mr K’s representatives said the new loan of £15,000 with M would’ve been visible to Tesco Bank but wasn’t taken into account. They also questioned the use of an estimate for Mr K’s general living expenses as well as the mortgage figure used in the affordability assessment. Mr K’s representatives added that the loan was obtained following pressure from scammers and had ultimately been terminated due to arrears, along with the other loans he applied for around the same time. As Mr K’s representatives asked to appeal his complaint has been passed to me to make a decision. 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. I’d like to begin by saying how sorry I am to hear Mr K fell victim to a cruel scam. I understand Mr K has also complained about other businesses that were involved. In this decision, I’m only able to look at Tesco Bank’s actions and whether it acted reasonably by approving Mr K’s loan application. I have considered whether there were signs I’d have expected Tesco Bank to have picked up on that showed Mr K was vulnerable at the time his application was made. Before agreeing to lend, the rules say Tesco Bank had to complete reasonable and proportionate checks to ensure Mr K could afford to repay the debt in a sustainable way. These affordability checks needed to be focused on the borrower’s circumstances. The nature of what’s considered reasonable and proportionate will vary depending on various factors like: - The amount of credit; - The total sum repayable and the size of regular repayments; - The duration of the agreement; - The costs of the credit; and - The consumer’s individual circumstances. That means there’s no set list of checks a lender must complete. But lenders are required to consider the above points when deciding what’s reasonable and proportionate. Lenders may choose to verify a borrower’s income or obtain a more detailed picture of their circumstances by reviewing bank statements for example. More information about how we consider irresponsible lending complaints can be found on our website. Tesco Bank’s final response explains it found Mr K to be in a strong financial position at the point his application was made. I’ve looked at the information Tesco Bank obtained and I think that’s a reasonable stance to take. Mr K confirmed he was employed and had a monthly income of £2,400 a month. That figure was verified via demographic data which confirmed the details provided. So I’m satisfied, as a starting point, Tesco Bank was using a reasonable monthly income figure for Mr K. Mr K’s credit search found he had a mortgage of £69,000 with monthly repayments of £398. I can see there’s some difference in terms of the mortgage figure quoted in the final response and investigator’s findings. The application form provided shows Mr K gave a mortgage payment of £350 a month which is what was used in the affordability assessment, not £400. But Mr K’s representatives have confirmed the mortgage was in joint names so I’m satisfied it was reasonable for Mr K to have confirmed his contribution of £350 a month and for that figure to be used when considering the affordability. I also think it’s fair to say that whether Mr K’s mortgage payments were recorded as £350 or £400 the outcome of the application would’ve been largely the same.

-- 2 of 4 --

Mr K’s credit file also showed he had two open credit commitments but no outstanding balances. Again, I can see our investigator said Mr K had a payment of £396 for his unsecured debts. But lending data provided shows no outstanding unsecured debts at the point of application. I think Mr K’s credit file indicated he was in a stable financial position with a reasonably modest mortgage of £69,000, up to date mortgage payments and no other outstanding debts. Mr K’s representatives have told us the three credit searches found on Mr K’s credit file in the six months before his application should’ve led to further enquiries but I disagree. There’s a range of reasons a credit search may be completed including the provision of new utilities, insurances, identity checks and applications for credit for example. I haven’t been persuaded that the three credit checks recorded indicated Mr K was vulnerable or should’ve led to additional checks by Tesco Bank. The affordability assessment used Mr K’s monthly income of £2,400 and made a deduction of £350 for his mortgage payment and £552 a month as an estimate of his general living expenses. The relevant lending rules allow businesses to used reasonable estimates for certain outgoings, including a customer’s general living expenses. There will be circumstances where it’s not reasonable to rely on an estimate. But I haven’t seen anything in the application information obtained that indicates Tesco Bank’s use of an estimate was unreasonable. As noted above, Mr K appeared to be in a stable financial situation, had no other unsecured debts and no signs of vulnerability. I’m satisfied the use of an estimate for Mr K’s general living expenses was a reasonable approach in the circumstances of Mr K’s application. The affordability assessment showed that after Mr K’s mortgage, general living expenses and new loan payments were paid he had a disposable income of around £1,010. In my view, that was a reasonable conclusion to reach following proportionate checks by Tesco Bank. And I’m satisfied the information obtained by Tesco Bank reasonably showed Mr K was able to sustainably afford the new loan repayments of £487.17. Mr K’s representatives have said Tesco Bank should’ve seen the new loan with M Mr K obtained the day before his application was made. But new accounts generally take between four and six weeks to be reported on a customer’s credit file. The credit file information Tesco Bank has provided shows no evidence of any other unsecured debts in Mr K’s name at the point of application. Overall, I’m satisfied the loan with M wasn’t something Tesco Bank was aware of when Mr K’s application was assessed. I understand Mr K was vulnerable at the time and having fallen victim to a scam. But I haven’t seen anything in the information Mr K submitted or that Tesco Bank obtained that would’ve indicated he was vulnerable or that additional checks would’ve been proportionate. I’ve considered whether the business acted unfairly or unreasonably in any other way including whether the relationship might have been unfair under Section 140A of the Consumer Credit Act 1974. However, for the reasons I’ve already given, I don’t think Tesco Bank lent irresponsibly to Mr K or otherwise treated them unfairly. I haven’t seen anything to suggest that Section 140A or anything else would, given the facts of this complaint, lead to a different outcome here. I’m very sorry to disappoint Mr K but for the reasons I’ve given above I haven’t been persuaded that Tesco Bank lent irresponsibly or otherwise treated him unfairly. As a result, I’m unable to uphold Mr K’s complaint.

-- 3 of 4 --

My final decision My decision is that I don’t uphold Mr K’s complaint Under the rules of the Financial Ombudsman Service, I’m required to ask Mr K to accept or reject my decision before 14 May 2026. Marco Manente Ombudsman

-- 4 of 4 --