Barclays Bank UK PLC trading as Tesco Bank · DRN-5975623

The complaint Barclays Bank UK PLC trading as Tesco Bank provided Mrs C with an initial loan of £5,000 in October 2023. It then provided a top up loan of £14,721 (of which £4,721 was used to repay the initial loan) in September 2024. Mrs C says the credit was provided irresponsibly. What happened The details of this complaint are well-known to both parties, so I won’t repeat them again here. The facts aren’t in dispute, so I’ll focus on giving the reasons for my 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 Mrs C’s case. Mrs C was provided with two loans by Tesco Bank and I have considered each lending decision below. Loan one: October 2023 I’ve decided the credit was provided fairly because: • I think the checks Tesco Bank did before providing the credit were reasonable and proportionate given the credit it offered and what it knew about Mrs C’s financial situation. • Tesco Bank gathered information about Mrs C’s income, employment and residential status. Mrs C declared she was self-employed with a net monthly income of £3,300, that she was married and a homeowner with a joint mortgage. Her income was verified and a credit check was undertaken. The credit check showed no delinquent accounts, defaults or county court judgments and recorded Mrs C’s credit commitments as up to date. Mrs C was recorded as having nine active accounts with total unsecured debt of £18,469. Her repayments for her existing credit commitments (excluding the mortgage) were recorded as £322 a month. • Having considered the results of the credit check, I do not find that Mrs C’s level of debts compared to her income were such that she should have been considered as overindebted and her management of her existing commitments didn’t raise concerns that she may be struggling financially. • Mrs C’s mortgage repayments in her credit file were recorded as £521. Tesco Bank included half this amount in its calculations. I note that Mrs C was married and the mortgage was joint, so this could have been a reasonable assumption, however I

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haven’t seen any confirmation by Tesco Bank that Mrs C was only responsible for half the costs. That said, even if the full mortgage cost was deducted from Mrs C’s income, along with her existing credit costs and the Tesco Bank loan repayments, I do not find this would suggest that the loan was unaffordable for Mrs C. • Based on the information Tesco Bank gathered and what it knew about Mrs C’s circumstances, there was nothing to suggest that Mrs C was likely to be unable to sustainably repay what she was being lent. • I don’t think Tesco Bank acted unfairly in any other way. This means I don’t think Tesco Bank did anything wrong when it provided loan one to Mrs C. Loan two: September 2024 Having considered everything, I’m upholding Mrs C’s complaint in regard to loan two. I’ll explain my reasoning below: I’ve decided the credit wasn’t provided fairly because: • I don’t think the checks Tesco Bank did before providing the credit were reasonable and proportionate given the credit it offered and what it knew about Mrs C’s financial situation. This is because the credit check showed that Mrs C’s total unsecured debts had increased from £18,469 around a year earlier to around £63,598. This increase was mainly accounted for by new loans and her loan repayments had increased to £1,560 a month. While Mrs C’s credit check didn’t record any defaults or delinquent accounts and noted her existing credit commitments as being up to date, I think that given the increase in her unsecured debts and comparing these to her income, that further questions should have been asked to ensure Tesco Bank had a clear understanding of Mrs C’s financial circumstances. • If Tesco Bank had done proportionate checks, I think it’s likely these would have shown it was unfair to provide the credit to Mrs C. Having looked through Mrs C’s bank statements and the additional information Mrs C has provided for the months leading up to the loan being issued, this shows her receiving regular income of around £460 from benefits. While there were other payments into the account, these weren’t regular income. Mrs C has explained that her husband was lending her money to meet her essential living costs and that given her low income he also covered most of the household expenses at this time. Mrs C was also carrying out trading activity but this didn’t result in a regular positive income. Given Mrs C’s existing credit commitments exceeded her regular income, I do not think that providing further credit at this time was responsible. • Based on the information Mrs C has provided about her circumstances at the time, I think Tesco Bank should have realised Mrs C was likely to be unable to sustainably repay what she was being lent. This means I don’t think Tesco Bank should have provided the September 2024 loan to Mrs C. 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 Mrs C in the circumstances of this complaint.

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I’m therefore satisfied, based on what I’ve seen, that no additional award would be appropriate in this case. Putting things right As I don’t think Tesco Bank ought to have provided the September 2024 loan, I don’t think it’s fair for it to be able to charge any interest or charges under the credit agreement. But I think Mrs C should pay back the amounts she has borrowed. Therefore, Tesco Bank should: • Add up the total repayments Mrs C has made towards her September 2024 loan and deduct these from the total amount of money Mrs C received. a) If this results in Mrs C having paid more than she received, any overpayments should be refunded along with 8% simple interest* (calculated from the date the overpayments were made until the date of settlement). Tesco Bank should also remove all adverse information regarding this account from Mrs C’s credit file. b) If any capital balance remains outstanding, then Tesco Bank should arrange an affordable and suitable payment plan with Mrs C. Once Mrs C has cleared the balance, any adverse information in relation to the account should be removed from her credit file. *HM Revenue & Customs requires Tesco Bank to take off tax from this interest. Tesco Bank must give Mrs C a certificate showing how much tax it’s taken off if she asks for one. My final decision My final decision is that Barclays Bank UK PLC trading as Tesco Bank should take the actions set out above in resolution of this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs C to accept or reject my decision before 23 April 2026. Jane Archer Ombudsman

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