Nationwide Building Society · DRN-5780795

The complaint Miss O complains Nationwide Building Society (“Nationwide”) irresponsibly provided her with an overdraft and increased her limit and continued to lend when she was struggling financially. What happened In May 2022 Miss O was provided with an overdraft. The initial limit was £250. In July 2022 the limit was increased to £2,000. Miss O complained to Nationwide in May 2025. She said the fees and charges are making her position worse, there were clear signs she was in financial difficulty and she’s stuck in the overdraft, unable to repay it. Nationwide responded to her complaint – they didn’t uphold it. They said they didn’t make an error when lending to her, and there are regular credits into the account as well as non- essential spending. They said if non-essential spending didn’t take place, the account would be affordable. Miss O didn’t agree with their response, so referred her complaint to our Service. An Investigator here looked into things – he agreed that the initial decisions to lend were fair – this means Nationwide didn’t make an error when providing her with the £250 or the £2,000 limit. He did, however, believe Nationwide stopped treating Miss O fairly from July 2024 onwards, as by this point Miss O had been in her overdraft for a significant amount of time, she was unable to make meaningful repayments towards the capital, and direct debits were frequently bouncing. Miss O agreed with the opinion, but Nationwide didn’t. They referred to a rule introduced during Covid, they said they sent Miss O repeat usage letters and that she was making transfers to another account in her name. They said Miss O didn’t appear to be in financial difficulty, but appeared to be mismanaging the account. Our Investigator responded reiterating his view, but Nationwide responded saying when Miss O did speak to their collections department, she was clear she didn’t want anything to affect her credit file and therefore no action was taken. Because an agreement couldn’t be reached, the complaint has been passed to me 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. Having done so, I’m in agreement with the Investigator. Because both Miss O and Nationwide accepted the findings regarding the decision to lend, I won’t go over this in detail. Although to avoid any doubt, I’m satisfied that Nationwide conducted proportionate checks

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and made a fair decision to lend to Miss O at the point of both the £250 limit and the £2,000 limit. So I’ve gone on to consider the review points. Nationwide will be familiar with all the rules, regulations and good industry practice we consider when looking at whether a bank treated a customer fairly and reasonably when applying overdraft charges. So I don’t consider it necessary to set all of this out here. Having carefully considered everything provided, I think Nationwide acted unfairly when they continued charging overdraft interest, fees and any associated charges on Miss O’s facility from July 2024. By this point, Miss O hadn’t seen a credit balance for an extended period of time and her statements show that she was what is known as hardcore borrowing. Miss O’s statements also show that the credits she was receiving were insufficient to free her from her overdraft. Nationwide would have known that she was having returned direct debits on her account. So, the overall information Nationwide had as well as the activity on Miss O’s account didn’t suggest she was in any sort of position to repay what he already owed without undue difficulty or borrowing further either. In these circumstances, I think that by July 2024 at the absolute latest, Nationwide should have stopped providing the overdraft on the same terms and treated Miss O with forbearance rather than adding even more interest, fees and charges on the overdraft. In April 2024 Miss O had a conversation with Nationwide where she told them that she was speaking to a third-party debt charity and weighing up her options. It’s not sufficient that because Miss O told them she had concerns about her credit file, that Nationwide take no further action other than send letters. I’ve seen Miss O’s other current account statements that Nationwide make reference to – and there’s also a significant overdraft on that account in the months leading up to July 2024 which is why there are also significant transfers being made. I’ve also considered Nationwide’s argument that they didn’t act because of an industry wide position, which was supported by the regulator the Financial Conduct Authority, not to expire overdrafts because of the pandemic. However, that guidance was temporary and in place until 2022. In any event, I’ve considered the guidance, and I don’t think that there was an absolute bar on reducing or removing overdrafts in the way that Nationwide suggested. More importantly, I haven’t seen anything at all to suggest that Nationwide took any steps to assess what if any financial hardship would be caused to Miss O should her overdraft have been reduced or removed. For the sake of completeness, I’d also point out that even if I were to accept that Nationwide couldn’t or shouldn’t have reduced or removed her overdraft because of the temporary FCA guidance, it doesn’t mean that they had to continue applying interest, fees and charges in the same way. Nationwide appears to be relying on guidance – that was temporary – to explain why support wasn’t provided a number of years later. Overall and having considered Nationwide’s arguments, I’m satisfied that they failed to act fairly and reasonably towards Miss O by not taking action in relation to her overdraft when they ought to have realised she was struggling to repay her overdraft by July 2024 at the latest. It follows that I’m upholding Miss O’s complaint.

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In reaching my conclusions, I’ve also considered whether the lending relationship between Nationwide and Miss O might have been unfair to Miss O under s140A of the Consumer Credit Act 1974. However, I’m satisfied that what I’m directing Nationwide to do results in fair compensation for Miss O given the overall circumstances of her complaint. For the reasons I’ve explained, I’m also satisfied that, based on what I’ve seen, no additional award is appropriate in this case. Putting things right Having thought about everything, I’m satisfied that it would be fair and reasonable in all the circumstances of Miss O’s complaint for Nationwide to put things right by: • Reworking Miss O’s current overdraft balance so that all interest, fees and charges added from July 2024 onwards are removed. This is to reflect the fact that Nationwide ought to have realised that the overdraft had become unsuitable for Miss O by this stage at the latest and she should have been offered forbearance. AND • If an outstanding balance remains on the overdraft once adjustments have been made Nationwide should contact Miss O to arrange a suitable repayment plan. Miss O is encouraged to get in contact with and cooperate with Nationwide to reach a suitable agreement for this. If they consider it appropriate to record negative information on Miss O’s credit file, it should reflect what would have been recorded had they started the process of taking corrective action on the overdraft in July 2024. Nationwide can also reduce Miss O’s overdraft limit by the amount of any refund if they consider it appropriate to do so, as long as doing so wouldn’t leave her over her limit. OR • If the effect of carrying out the above adjustments results in there no longer being an outstanding balance, then any extra should be treated as overpayments and returned to Miss O 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 Nationwide should remove any adverse information from Miss O’s credit file. Nationwide can also reduce Miss O’s overdraft limit by the amount of refund if it considers it appropriate to do so. † HM Revenue & Customs requires Nationwide to take off tax from this interest. Nationwide must give Miss O a certificate showing how much tax they have taken off if she asks for one. My final decision It’s my final decision that I uphold Miss O’s complaint against Nationwide Building Society from July 2024.

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Under the rules of the Financial Ombudsman Service, I’m required to ask Miss O to accept or reject my decision before 21 April 2026. Meg Raymond Ombudsman

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