Hi again, I’ll do my best to address lots of the main points here! If you haven’t already, please read these two posts (Post 1, Post 2) first for more context.
As a reminder, we’ve taken overdrafts away from some users because we received new information from our Credit Reference Agency (Callcredit / Noddle). The information could be something like a bankruptcy, some defaulted payments, or a County Court Judgement.
This is a really helpful summary of what’s happened ^
If you get in touch with Customer Service we can tell you this. Going forwards we’ll try to do a better job of including more specific information in the initial message.
We will have to take these away too. But when the overdraft has been used there’s a much higher chance of putting users into financial difficulty, and so we’ll need adjust the notice period accordingly. We’ll have to take greater care to make sure not to put these users into financial difficulty.
We started with users who hadn’t used the overdraft so:
a) the risk of putting people into financial difficulty is lower, and
b) we can learn what issues come up (this thread has served that purpose well)
To be clear, we won’t remove the overdraft just because you don’t use the overdraft. We will remove the overdraft if we receive new information from our Credit Reference Agency that suggests we should no longer be lending to you. We do this because we want to be a responsible lender. We will adjust the way in which we remove the overdraft based on how it was used.
Neither of these are why we removed the overdrafts. As mentioned previously, we learned some new information about the credit histories of these particular customers. These credit histories aren’t compatible with our current risk appetite and so we have to remove the overdraft. This may change in the future as we change our risk appetite.
The risk is two-fold:
- Some users could end up in further debt
- We could be lending money that we won’t get back
Risk tolerance is likely to differ from bank to bank, as is the source of the information they use to make a decision about who to lend to and how much.
This isn’t necessarily true - we regularly receive new information about our overdraft users, and a soft check does not occur.
Our T&Cs allow for us to do soft checks on every user, and we do two when you first sign up. We only do a hard check when you accept a credit agreement for the overdraft. We may sometimes do an additional soft check, but we’d usually let you know. You’d know if we had as you’d be able to see on Noddle.
This thread can hopefully answer any other queries about checks.
Agree, this would be nice and something we’d like to do in the future. In the short term we’ll be encouraging everyone to log in to Noddle to see this information.
We really value the feedback. We working on finding the right level of transparency here. It seems like improving transparency around when we’ll take an overdraft away and how we’ll notify you is the most important thing we can improve. Given the risk involved with overdrafts, there will have to be limits here.
We’re trying to find the right level of information without explaining the inner workings of our Credit Decisioning Engine, which as you can imagine might open us up to people trying to game it.
- Because we got some new information about the Credit Histories of some users, these Credit Histories don’t fall into our current risk tolerance
- The users were notified, but not in advance. That’s because, for these particular users, they had never used the overdraft and we felt the risk of putting them into financial difficulty was low
- See further up
We know it’s not ideal to have something suddenly taken away. We’ll think about how we can do better in future.
As we build out our overdraft, we’ll create a more advanced way of deciding who to lend to and how much. Right now, we’re pretty new to this and so we’re cautious.
It’s highly unlikely that something we did caused this, as we haven’t sent any information to the Credit Reference Agency about this yet. Please get in touch with Customer Service if you’d like to talk about it further.
We’ll try to improve the process for removing overdrafts, and how we’ll notify you.
This is a separate thing we’re working on. Given we currently rely on data from our Credit Reference Agency to make decisions about who to lend to, there are occasions where the data doesn’t match and we can’t find you. We’re trying to improve this at the moment.
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To summarise, it seems like the main things we could work on are:
a) improving the information we send when we take away an overdraft (or reduce a limit), explaining why we’re doing it
b) improving how we’ll do this, for example, we might consider:
- Providing longer notice periods where there’s a lower risk of causing financial difficulty
- Stepping down the overdraft before removing it completely, or reinstating a reduced limit where users are financial difficulty
Realise that was a ton of information, hopefully it helps. Again, we really value the feedback, so please keep it coming! Please also remember that our overdrafts are relatively new and there’s a ton of things we’re working hard to improve. Appreciate you bearing with us 
Rich