DRN-6115667

The complaint Monzo Bank Limited (‘Monzo’) provided Miss M with an initial £200 overdraft in January 2020. It then went on to increase her limit on six separate occasions; to £500 in August 2021; then to £800, £1,000, £1,050 and £1,250 in September 2021; and finally to £2,000 in October 2021. Miss M says the overdraft was provided irresponsibly. What happened Our investigator upheld the complaint in part because he thought that by October 2023 Monzo ought by to have done more to prevent Miss M getting into financial difficulty. Monzo has accepted our investigator’s findings but Miss M has not, so the complaint has come to me for 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. 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 Miss M’s case. I agree that the overdraft facility wasn’t provided fairly in part because: • I think the checks Monzo did before providing the initial overdraft facility and the increases that followed were reasonable and proportionate. I agree that Miss M looked to have only limited disposable income, but I think this was reflected in the relatively low initial overdraft limit of £200. I’ve also kept in mind that although Miss M had some debt elsewhere, she was receiving a regular income and there was no significant evidence that she might be having financial difficulties. • I think the checks Monzo did before providing each of the increases to the overdraft were reasonable and proportionate, given the levels of increase and what it knew about Miss M’s financial situation. Her income had increased and based on what Monzo saw, she was likely to have more disposable income and so was better placed to be able to sustainably repay the increased overdraft. But I agree that for the final increase - to £2,000 - better checks were needed. From the bank statements we’ve seen though she still looked to have a good level of disposable income still available and there was nothing to suggest her financial situation might be at risk of deteriorating. • Miss M made regular use of her overdraft from the outset. Monzo wrote to her about her level of overdraft use on 8 separate occasions in 2022. But I agree that when the level of heavy overdraft use continued for another year, Monzo ought to have taken active steps to reduce Miss M’s level of overdraft reliance. Continuing to write to her

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about her usage wasn’t enough. I don’t think that because Miss M didn’t respond to these letters, Monzo had done enough and so didn’t need to continue to seek to contact her to explore ways for her to reduce her reliance on her overdraft. Had such further attempts failed, then I think it would be reasonable for Monzo to have taken action on its own. • I’ve also seen what Miss M told our investigator in response to the view finding. In particular that the October 2023 increase wasn’t affordable for her. That doesn’t lead me to change my findings as I still don’t think there was enough evidence available to Monzo to show or suggest that the increase at that time might not be affordable. This all means I don’t think Monzo acted fairly in allowing Miss M to continue using her overdraft from October 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 Miss 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 I think Monzo should now settle Miss M’s complaint. Monzo should therefore: • Re-work Miss M’s current overdraft balance so that any additional interest, fees and charges applied from October 2023 onwards are removed. AND • If an outstanding balance remains on the overdraft once these adjustments have been made Monzo should contact Miss M to arrange a suitable repayment plan for this. If it considers it appropriate to record negative information on Miss M’s credit file, it should backdate this to October 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 Miss 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 Monzo should remove any adverse information from Miss M’s credit file. † † HM Revenue & Customs requires Monzo to take off tax from this interest. Monzo must give Miss M 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 Monzo Bank Limited must put things right in the way I’ve set out above. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss M to accept or reject my decision before 14 May 2026. Michael Goldberg Ombudsman

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