The Royal Bank of Scotland Public Limited Company · DRN-6259873

The complaint Mr A complains that The Royal Bank of Scotland Public Limited Company (RBS) irresponsibly lent to him. What happened Mr A was approved for a RBS credit card in June 2024, with a £10,000 credit limit. Mr A says that this was irresponsibly lent to him. Mr A made a complaint to RBS, who did not uphold his complaint. RBS said that they were unable to agree they acted irresponsibly. Mr A brought his complaint to our service. Our investigator did not uphold Mr A’s complaint. He said that there was no detriment to Mr A even if RBS should have completed further checks as he had been charged no interest or incurred fees on the account. Mr A asked for an ombudsman to review the complaint. In summary, he said that it was important to see what further checks would have shown, to see if the repayments would be affordable for him. He said the promotional interest rate would have ended now, so there was detriment for him. As my findings differed in some respects from our investigator’s, I issued a provisional decision to give both parties the opportunity to consider things further. This is set out below: “I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Before agreeing to approve the credit available to Mr A, RBS needed to make proportionate checks to determine whether the credit was affordable and sustainable for him. There’s no prescribed list of checks a lender should make. But the kind of things I expect lenders to consider include - but are not limited to: the type and amount of credit, the borrower's income and credit history, the amount and frequency of repayments, as well as the consumer's personal circumstances. I’ve listed below what checks RBS have done and whether I’m persuaded these checks were proportionate. RBS used information from Mr A and a Credit Reference Agency (CRA). Mr A declared a net monthly income of £3,500, which RBS calculated to be a gross annual income of around £52,500. The data from the CRA that RBS used told them that Mr A had total active unsecured debt of £35,800. So Mr A would have had a debt to income ratio of around 73.3%. If Mr A used the full £10,000 of his new credit limit then he could have had up to a 87.2% debt to income ratio. I say up to, on the basis that he may have intended to have transferred a balance(s), which would mean his debt to income wouldn’t rise as much, and Mr A did actually do this, but the balance he transferred wasn’t near his credit limit, so the debt to income ratio did increase. RBS completed an affordability assessment using information from a CRA (his monthly credit commitments) and modelling (which is an industry standard way of estimating outgoings). The affordability assessment showed that Mr A should be able to sustainably

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afford repayments for a £10,000 credit limit. But while the affordability assessment showed Mr A could afford repayments, I did notice a discrepancy in the calculation. Mr A declared mortgage costs of £500, but a CRA reported his monthly mortgage payment was £1,545, so it’s not clear how RBS used a mortgage figure of £570 in their calculations. I would either expect them to use £500 (which Mr A declared), or £1,545 based on what the CRA told them the monthly payment was, or £772.50, which was half of the mortgage payment, since it appeared Mr A had a financial associate. But the CRA also returned data which could suggest Mr A was already in financial difficulty. He had opened two new accounts in the previous three months, and he was currently in arrears on one of his external accounts. So based on these factors, and the high debt to income ratio already, I’m persuaded that RBS should have completed further checks to ensure that Mr A could make sustainable and affordable repayments for a £10,000 credit limit. There’s no set way of how RBS should have made further proportionate checks. One of the things they could have done was to contact Mr A to find out why he was in arrears, and what his expenditure actually was. Or they could have asked for his bank statements as part of a proportionate check to ensure the lending was sustainable and affordable for him. Mr A has forwarded his bank statements for the three months leading up to this lending decision. They do show financial difficulties. Mr A was often over £3,000 overdrawn. He had returned direct debits on each of the three bank statements I viewed. In total, over the three month period, he had 19 returned direct debits, and these were often for low amounts of money, with the lowest returned direct debit being for £1. So if RBS would have made further checks based on the reasons I provided earlier, then I’m persuaded they wouldn’t have approved the £10,000 credit limit as they would have seen that Mr A wouldn’t be able to make affordable and sustainable repayments. So I’m persuaded that RBS did not make a fair lending decision here. I’ve also considered whether the relationship might have been unfair under s.140A of the Consumer Credit Act 1974. However, I’m satisfied the redress I have directed at the end of this decision results in fair compensation for Mr A in the circumstances of his complaint. I’m satisfied, based on what I’ve seen, that no additional award would be appropriate in this case.” I invited both parties to let me have any further submissions before I reached a final decision. Mr A accepted the provisional decision. RBS responded to the provisional decision, and they said they do not have anything to add for my consideration. 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. As neither party have provided me with any further information to consider, then my decision and reasoning remains the same as in my provisional decision. Putting things right In the provisional decision I said I intend to uphold this complaint. I said I intend to ask The Royal Bank of Scotland Public Limited Company to take the following actions:

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RBS should arrange to transfer any debt back to themselves if it has been passed to a debt recovery agent or liaise with them to ensure the redress set out below is carried out promptly; Rework the account removing all interest, fees, charges, and insurances (not already refunded) that have been applied; If the rework results in a credit balance, this should be refunded to Mr A along with 8% simple interest per year* calculated from the date of each overpayment to the date of settlement. RBS should also remove all adverse information regarding this account from Mr A’s credit file; Or, if after the rework there is still an outstanding balance, RBS should arrange an affordable repayment plan with Mr A for the remaining amount. Once Mr A has cleared the balance, any adverse information in relation to the account should be removed from Mr A’s credit file. I’m still satisfied this is a fair outcome for the reasons given previously. *If RBS considers that they are required by HM Revenue & Customs to deduct income tax from that interest, they should tell Mr A how much they’ve taken off. They should also give Mr A a tax deduction certificate if he asks for one, so he can reclaim the tax from HM Revenue & Customs if appropriate. My final decision I uphold this complaint. The Royal Bank of Scotland Public Limited Company should settle the complaint in line with the instructions in the “Putting things right” section above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr A to accept or reject my decision before 27 April 2026. Gregory Sloanes Ombudsman

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