I’ve thought this through so more so I’ll pick up on this point too.
The flat rate doesn’t penalise users borrowing more but that’s not the same as encouraging or incentivising users to borrow more.
Instead of trying to put users off borrowing more than they can afford to quickly repay (since this is a short term loan, after all 
), I think that Monzo shouldn’t lend users more than they can afford to pay back quickly.
Banks that charge fees based on interest / tiered pricing can’t (or at least, probably wouldn’t want to) adopt that approach because it would reduce their profits. But since Monzo is using this flat pricing model, they can. That also aligns well with Monzo’s aim to keep their balance sheet small.