Nationwide Building Society · DRN-6254842

The complaint Mr W complains that Nationwide Building Society (“Nationwide”) failed to support him as a vulnerable customer which resulted in him being able to spend significant amounts on gambling. What happened Mr W has been a FlexBasic account holder with Nationwide since October 2018. This account has no overdraft facility. Mr W has also been a FlexAccount holder since March 2020. This account was opened with a facility of £250. This was increased as follows: Credit Limit Increase (CLI) Number Date Existing Limit Limit Increase New Limit 1 04/09/2021 £250 £250 £500 2 31/03/2022 £500 £1000 £1500 3 15/04/2022 £1500 £500 £2000 In October 2024, Mr W told Nationwide about his gambling problem. Nationwide applied the standard gambling block. However, as I understand it, Mr W was keen for Nationwide to apply a block on international payments as well which would otherwise not be impacted by the gambling block (or the block Mr W had in place via GamStop). But Nationwide said it could not block specific transactions. Therefore, the standard gambling block remained in place. In April 2025, Mr W complained to Nationwide regarding a number of transactions he said he made because he was the victim of a scam. Mr W was targeted via email by an online casino and ended up making 47 transactions totalling £1,525.85 over 41 days. Mr W says he found out later this was a fraudulent website without a licence to operate in the UK as a genuine casino. Mr W felt Nationwide “had a duty of care to protect the vulnerabilities of customer and [these payments] should have raised red flags” and, therefore should have been “queried or challenged by Nationwide”. Around the same time, Mr W also complained about Nationwide’s failure to intervene and support him with his gambling problem in the seven years he had held an account with it. Mr W said Nationwide conducted “absolutely no account monitoring to see potential red flags with spending patterns”. In May 2025, Nationwide issued its final response in which it said - in relation to the Mr W’s complaint about the fraudulent transactions - that, as the payments were made by VISA using debit card details, the payments fall “out of the scope of the regulations for a refund”. And with regards to Mr W’s complaint about Nationwide’s failure to intervene and support him with his gambling problem, it said that it did not consider the account activity to be “sufficiently unusual that they should have alerted [its] security systems”. As a result, Nationwide did not think it had acted unfairly.

-- 1 of 10 --

Nationwide did offer £50 for its failure to adhere to Mr W’s request for the final response to be sent to him via email, rather than letter. Unhappy with Nationwide’s response, Mr W referred his complaint to our service. In late September 2025, during a telephone call with our service, Mr W confirmed that the complaint is now solely about Nationwide’s actions (or inactions) in relation to his account conduct and the broader lack of support he feels he has received in relation to his problem gambling. Mr W has confirmed that he is no longer wishes to complain about the alleged fraudulent transactions. As such, I will make no further reference to that matter within this decision. In November 2025, a block was placed on Mr W’s account due a transaction which had flagged as potentially fraudulent. As a result, Mr W contacted Nationwide and, during this call, Mr W confirmed this was a genuine transaction to an overseas gambling company. Mr W noted that this was the first time a transaction had been flagged in this way. During this call, Nationwide offered to place an online block on the card. This would allow Mr W to still use the card in person – including cash withdrawals – as well as use his online banking to transfer funds between accounts. But this block would prevent him being able to make online payments. Mr W agreed for this block to be applied. However, Mr W was unhappy this block had not been offered before. This matter was initially raised as a new complaint but, as it directly relates to the existing complaint with our service, Nationwide has agreed for it to be considered as part of this case. In December 2025, an investigator looked into the complaint and issued their opinion. In short, the investigator said whilst Nationwide has applied the standard gambling blocks on to Mr W’s account, it does not have the ability to block international payments. So, the investigator did not think Nationwide had treated Mr W unfairly when rejecting this request. And with regards to the block applied in November 2025, the investigator noted Nationwide had offered this previously, but it was declined as Mr W did not think it was practical. With all of that being the case, the investigator did not uphold Mr W’s complaint. Mr W did not agree. In doing so, Mr W said (amongst other things) that Nationwide had failed to comply with its obligations under the Financial Conduct Authority (FCA) Consumer Duty (PRIN 2A), the FCA guidance on the Fair Treatment of Vulnerable Customers (FG21/1), the FCA Consumer Credit Sourcebook (CONC) and the Standards of Lending Practice. As no agreement has been reached, the complaint was passed to me to decide. Early this month, I issued a provisional decision. Here is what I had to say: 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 currently intend to uphold this complaint in part. I’ll explain why I think this is a fair outcome in the circumstances. However, before I do, I’m aware that I’ve summarised this complaint above in less detail than it may merit. No discourtesy is intended by this. Instead, I’ve focussed on what I think are the key issues here. Our rules allow me to do this. This simply reflects the informal nature of our service as a free alternative to the courts.

-- 2 of 10 --

If there’s something I’ve not mentioned, it isn’t because I’ve ignored it. I haven’t. I’m satisfied I don’t need to comment on every individual argument to be able to reach what I think is the right outcome. I will, however, refer to those crucial aspects which impact my decision. Lastly, I would add that where the information I’ve got is incomplete, unclear or contradictory, I’ve based my decision on the balance of probabilities. As I’ve set out above, Mr W notified Nationwide of his gambling problem in October 2024 at which point it implemented a gambling block. I will address whether Nationwide acted fairly in its response to being told about Mr W’s problem later in this decision. However, I will begin by focussing on whether Nationwide should have intervened on Mr W’s account before he notified it about his problem in October 2024. Should Nationwide have intervened on Mr W’s account before October 2024? October 2018 - March 2020 It is my understanding that Mr W opened a FlexBasic in October 2018. No overdraft facility was attached to the account. I have looked through the FlexBasic account statements between October 2018 and March 2020 and, having done so, I’m not persuaded the account activity ought to have alerted Nationwide that something may have been wrong and that it needed to step in. The statements do show for the period in question some identifiable gambling activity, but it I do not think this, on its own, would suggest there is a problem and that Nationwide should’ve stepped in and offered support. I can see there were quite a significant amount of cash withdrawals, but I don’t think that would have given Nationwide cause to step in. And, in the absence of other indicators of financial hardship – such as unarranged overdraft usage or regularly returned Direct Debits - I don’t think Nationwide had any cause to intervene or otherwise take steps to support Mr W during this time. March 2020 – March 2021 In March 2020, Mr W opened a FlexAccount with a £250 overdraft facility. Noting what I have said about Mr W’s FlexBasic account usage, I don’t think there was anything which ought to have alerted Nationwide to the possibility that providing Mr W with an overdraft facility in March 2020 would be problematic. As a starting point, it is important to clarify that banks don’t routinely monitor individual transactions on accounts or have specific mechanisms to look for gambling activity beyond identifying debit card payments made to gambling merchants using standardised Merchant Category Codes (MCCs). After all, gambling isn’t illegal and a customer should be free to spend their money as they please. But I would expect a business to step in and offer appropriate support where I consider it should’ve reasonably become aware there might be a problem. And, throughout the life of an account, there may be natural points where a bank has an opportunity to review how the account is being conducted and, if necessary, take steps to intervene – such as when it approves an overdraft limit increase or conducts an annual review of an overdraft.

-- 3 of 10 --

So, I’ve turned to look at the first of these potential intervention points after the overdraft was first provided. Whilst there is no set time period for how often overdraft reviews should take place; I would expect these to at least take place annually if not more frequently. In the absence of evidence to suggest otherwise, I have assumed that the first annual review took place in March 2021 – this being one year on from the inception of the overdraft. I’ve looked through the account statements between March 2020 and March 2021. Having done so, whilst there is evidence of some gambling I do not think it was to the extent – particularly relative to Mr W’s income - that ought to have given Nationwide cause to intervene. What’s more, I note during this period Mr W rarely made use of the overdraft. Oftentimes the account saw a healthy credit balance. And there were no other obvious signs of financial distress – such as returned Direct Debits – which ought to have given Nationwide cause for concern. I recognise Mr W may have been using his FlexBasic account to gamble during this time1. But I do not think an annual review of an overdraft facility required Nationwide to conduct a holistic review of Mr W’s wider financial situation (as it would in, say, a mortgage application). Instead, the purpose of an annual review is for a lender to consider whether a customer is using the facility in such a way that it should continue providing the overdraft on the same terms. In that context, I think the review would be confined to the account to which the overdraft is attached. With that being the case, I don’t think Nationwide had any cause to take further action at this stage. The next natural point of potential intervention is in September 2021 when CLI 1 is approved. September 2021 In the months between March 2021 and the approval of CLI 1 in September 2021 Mr W’s spend on gambling appears to increase significantly, particularly in the months immediately prior to the approval of CLI 1. For example, in July and August 2021, Mr W gambles around £3,080 and £5,150 respectively. This is roughly 82% of his salary in July and 145% of his salary in August. This represents a marked shift in the pattern of gambling compared to the months before. Most of the time, businesses rely on algorithms to identify risk to the account and the account holder. And those algorithms are primarily designed to look for things like evidence of financial harm, such as direct debits going unpaid, or people going into unarranged overdrafts or exceeding agreed overdraft limits for prolonged periods of time. I recognise Mr W was, on the face of it, maintaining the account well. After all, he was rarely using his overdraft and there were no other obvious signs of financial hardship. Mr W was fully authorising these gambling transactions, and as he was managing his account within the agreed limit most, if not all, of the time, it could be argued that was nothing to indicate that providing further might be a problem. 1 At least up until September 2020 at which point, as I understand it, the FlexBasic account was no longer used.

-- 4 of 10 --

But, on balance, I think the significant shift in account activity, coupled with the extent of his gambling relative to his income, ought to have alerted Nationwide to a potential problem such that it could have intervened at that stage. Nationwide was limited in the action it could have taken. It could’ve sent a standard letter concerning help and support it could give for gambling and impose a gambling block, for example. But, in any event, this was an opportunity to intervene and offer support which may have had an impact on a vulnerable customer. And, looking at things in the round, I do not think Nationwide should have agreed to extend the overdraft on that basis. However, noting Mr W’s (lack of) overdraft usage, I am not persuaded that it was necessary to take steps to withdraw the overdraft completely at this stage. So, I think a refund of all overdraft interest, fees and charges applied to any overdrawn balance above £250 from September 2021 until March 2022 seems fair in the circumstances. And it should pay compensatory interest on that amount. The next natural point of potential intervention was in March 2022 when CLI 2 was approved. March 2022 By the time Mr W applies for CLI 2, Nationwide had access to a reasonable body of evidence regarding Mr W’s gambling problem. I say this because, in the six months between CLI 1 and CLI 2, Mr W gambled around £3,270 per month on average. This represented the vast majority, if not all, of his monthly salary in this period. Mr W was also making more regular use of his overdraft (albeit remaining within the agreed limit) to gamble within this period. I think if Nationwide had sufficiently reviewed Mr W’s account activity before agreeing to extend his overdraft, it would have seen that Mr W was gambling excessively and his difficulties were not short-lived - so Nationwide should have realised it was irresponsible to keep lending on this basis. And it should have taken steps to withdraw the overdraft. By not taking action at this time, Mr W continued to have access to an overdraft which he was using – at least in part - to help fund problem gambling. I recognise that a measure like removing an overdraft facility solely due to problem gambling is not something I would expect Nationwide to consider lightly or without first providing alternative support. But, in the circumstances of this case, I think it would have been reasonable noting it ought to have already provided alternative support in September 2021. With that being the case, I think Nationwide should refund all overdraft interest, fees and charges from March 2022 onwards. And it should pay compensatory interest on that amount. Mr W has highlighted Nationwide’s lack of support in this regard has been distressing to him. And having considered the matter, I agree this would have been distressing for Mr W. So, I think Nationwide should pay Mr W £300 compensation for this failing. Did Nationwide act fairly when Mr W disclosed his gambling problem in October 2024? In October 2024, Mr W notified Nationwide about his gambling problem. Nationwide applied the standard gambling block. However, as I understand it, Mr W was keen for Nationwide to apply further restrictions – such as a limit on cash withdrawals or a block on international payments - which would otherwise not be impacted by the gambling block.

-- 5 of 10 --

But Nationwide said it could not impose a cash withdrawal limit or block specific transactions. As an alternative, Nationwide said it could block online banking altogether. Mr W did not wish to do this noting the extent to which he (like many customers) utilise online banking day-to-day. As a result, Nationwide referred the case to its Specialist Support Team (SST). From the information provided, it appears the SST attempted to contact Mr W by phone on 31 October 2024 (when a voicemail was left) and on 1 November 2024. But they were unable to speak to Mr W. It appears a text message was also sent on 15 January 2025 inviting Mr W to get in touch. But, as no contact was made, it seems the standard gambling block remained in place and no further action was taken. In November 2025, a transaction to an overseas gambling website was flagged as potentially fraudulent and a block was placed on the account. As a result, Mr W called Nationwide to authorise the transaction. During the course of this conversation, the advisor notifies Mr W that it could place an online block on the card. This would restrict (but not remove) Mr W’s use of his online banking facilities. As I understand it, this block would enable Mr W to transfer money between accounts but prevent him being able to make online payments. Mr W agreed for this block to be applied. I recognise this is not what Mr W wanted when he contacted Nationwide in October 2024. But I am unclear why this type of restriction was not offered to Mr W when he told Nationwide that the standard gambling block did not go far enough and complete removal of his online banking was not practical. And, in the absence of anything to evidence why it was not possible at that time, I currently think Nationwide should have provided this option to Mr W then. And, noting he agreed to it in November 2025, I think it is likely that he would have agreed to it in October 2024 had it been offered. I think Nationwide’s failure to offer support that he later learned was an option at the time was distressing for him and I think he ought to be compensated for that. With that said, any award here is somewhat tempered by the fact it seems Mr W did not engage with the SST in late 2024/early 2025 and, if he had done, Nationwide may have been able to provide more tailored support. Looking at things in the round. I think Nationwide should pay Mr W £200 compensation for this failing. Summary I know this outcome will likely disappoint Mr W as he now finds himself in a very difficult situation having amassed debt that he now needs to repay. However, the redress I’ve suggested in this decision (and set out below) is in recognition of the fact that Nationwide ought to taken steps to intervene at an earlier stage. But I can’t hold Nationwide liable for Mr W’s gambling losses and the overall impact of problem gambling as that wouldn’t be reasonable. Instead, the compensation is in recognition of Nationwide’s failures and additional distress and upset those caused. This is why I currently think compensation for the distress Nationwide’s failings would have caused – as well as a refund of at least of portion of the interest and charges applied to the overdraft from September 2021 – is a fair way to resolve matters in this case. How to put things right For the reasons I’ve set out above, I currently think Nationwide should: • Re-work Mr W’s account from September 2021 until February 2022 so that all interest, fees and charges applied to it on overdrawn balances above £250 are

-- 6 of 10 --

removed; and • Re-work Mr W’s account from March 2022 onwards so that all interest, fees and charges applied to it from this date onwards are removed. AND • If an outstanding balance remains outstanding once these adjustments have been made Nationwide should contact Mr W to arrange a suitable repayment plan for this. If it considers it appropriate to record negative information on Mr W’s credit file, it should backdate this to March 2022. OR • If the effect of removing the interest, fees and charges as directed above results in there no longer being an outstanding balance owed, then any extra should be treated as overpayments and returned to Mr W, along with 8% simple interest per year 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 Mr W’s credit file. † • Nationwide should pay a total of £500 compensation for the distress this has caused Mr W. † HM Revenue & Customs requires Nationwide to take off tax from this interest. Nationwide must give Mr W a certificate showing how much tax it’s taken off if he asks for one. Responses to my provisional decision I gave both parties an opportunity to respond to my provisional decision. And I would like to thank both parties for doing so in advance of the deadline I set thereby enabling a swifter resolution to proceedings. In response, Mr W agreed with my overall direction, in particular my finding that Nationwide ought to have intervened sooner. Mr W did, however, wish to provide some further context before I finalised my determination. In summary, Mr W said: • There were signs of escalating gambling behaviour before September 2021 which may have warranted earlier intervention. • After informing Nationwide of his gambling addiction in October 2024, Mr W actively sought stronger protections to prevent further harm and the support Nationwide offered did not go far enough (and options which were seemingly available were not discussed at all, such as the online-payment block). • When Mr W informed Nationwide of his gambling addiction, he asked if a limit could be placed on cash withdrawals. He was advised it was not possible, but no meaningful alternatives or tailored suggestions were explored. • There was no further outreach from Nationwide after January 2025 until March 2026 which is a very long period without support or follow-up despite it being aware of his vulnerability. • The FCA’s Consumer Duty (PRIN 2A) required Nationwide to prevent foreseeable

-- 7 of 10 --

harm and act with the standard of care a prudent firm would apply when dealing with vulnerable retail customers and Nationwide fell well short of those expectations in this case. • As a direct result of the absence of ongoing support, Mr W continued to spend many thousands of pounds on gambling and this harm was entirely foreseeable. • The distress caused by the lack of follow-up and missed opportunities to provide meaningful intervention over a prolonged period of time leads Mr W to conclude that the proposed compensation does not fully reflect the seriousness of Nationwide’s failings in this instance. I would like to thank Mr W for taking the time to compile this submission and I would like to reassure him that, whilst I won’t reference everything that he has said within my final decision, I have carefully considered it. No discourtesy is meant by this, but it reflects the informal nature of this service in resolving disputes. Nationwide accepted my provisional decision. In doing so, it calculated the refund of interest and charges due as per my direction to be £3,509.04 to which it would apply interest. This would bring Mr W’s account into a credit balance. In addition, Nationwide agreed to pay £500 compensation to Mr W. 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 am not minded to depart from what I had to say in my provisional decision. I recognise this may come as a disappointment to Mr W, but I’ll explain why. However, as I’ve said, in doing so I won’t reference everything that Mr W has said in response to my provisional decision. I recognise and accept that there were signs of gambling prior to September 2021 and, at times, this may have been viewed as problematic. But, for the reasons I set out in my provisional decision, I am not persuaded that Nationwide ought to have stepped in prior to this point. After all, Mr W appeared to be managing the account well Mr W – he was using his overdraft infrequently and there no other obvious signs of financial hardship such as returned Direct Debits or similar. In my view, it was not until by September 2021 (when CLI 1 was approved) that Nationwide had sufficient cause to intervene. At this stage, there had been a marked shift in Mr W’s spending on gambling such that it ought to have recognised that further borrowing was unlikely to be appropriate. In saying that, I recognise Mr W wasn’t using his overdraft heavily at this time which is why I am not persuaded that it was necessary to take steps to withdraw the overdraft completely at this stage. But I do not think Nationwide ought to have increased the facility. As a result, I do not think Nationwide ought to refund all interest and charges applied from this point, only those attached to any overdraft above £250. But, for the reasons I explained, I think Nationwide ought to have seen that Mr W had a sustained and, possibly worsening, gambling problem when it approved CLI 2 in March 2022. It is from that point I think it would have been reasonable to begin taking steps to remove the overdraft facility altogether. And this is why I think all interest, fees and charges applied to the overdraft from this point on should be refunded. In my provisional I set out why – taking into consideration all the relevant rules and

-- 8 of 10 --

regulations (which included Consumer Duty) - I thought Nationwide ought to have intervened much sooner. I appreciate Mr W feels that earlier intervention would have been successful in stopping him spending “many thousands of pounds on gambling” and, therefore, would have prevented foreseeable harm. And this is why he feels the compensation I’ve recommended doesn’t go far enough. But I am satisfied that the compensation package I’ve recommended is fair in the circumstances. I don’t doubt that Mr W has been through a really difficult time over the last six or seven years as he has battled his gambling problem. And this must have caused him a great deal of stress, worry and anxiety over a prolonged period of time. And I am no way intending to downplay or minimise the impact all of this has had on Mr W. However, this purpose of this service isn’t punitive, and I don’t think Nationwide is liable for the overall impact of the problem gambling. After all, if Nationwide had done more at an early stage, Mr W might well have still gambled via other means or sought ways to bypass any restrictions Nationwide put in place. I say this noting Mr W used overseas gambling websites to circumvent the standard gambling block Nationwide implemented in October 2024. So, whilst further restrictions may have helped, I can not safely say that it would have prevented foreseeable harm in the way Mr W describes. So overall, while I understand the enormous impact compulsive spending has had on him, I can’t hold Nationwide responsible for that. Instead, the compensation is in recognition of Nationwide’s failures and additional distress and upset those caused. So, I think the £500 compensation (alongside the other items of redress) I recommended in my provisional decision is fair and reasonable in the circumstances. Putting things right For the reasons I’ve set out here and in my provisional decision, I think Nationwide should: • Re-work Mr W’s account from September 2021 until February 2022 so that all interest, fees and charges applied to it on overdrawn balances above £250 are removed; and • Re-work Mr W’s account from March 2022 onwards so that all interest, fees and charges applied to it from this date onwards are removed. AND • If an outstanding balance remains outstanding once these adjustments have been made Nationwide should contact Mr W to arrange a suitable repayment plan for this. If it considers it appropriate to record negative information on Mr W’s credit file, it should backdate this to March 2022. OR • If the effect of removing the interest, fees and charges as directed above results in there no longer being an outstanding balance owed, then any extra should be treated as overpayments and returned to Mr W, along with 8% simple interest per year 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 Mr W’s credit file. • Nationwide should pay a total of £500 compensation for the distress this has caused Mr W.

-- 9 of 10 --

† HM Revenue & Customs requires Nationwide to take off tax from this interest. Nationwide must give Mr W a certificate showing how much tax it’s taken off if he asks for one. My final decision For the reasons I’ve explained, my final decision is that I uphold Mr W’s complaint about Nationwide Building Society and direct it to settle the complaint in the way I’ve set out above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr W to accept or reject my decision before 24 April 2026. Ross Phillips Ombudsman

-- 10 of 10 --