Not upheld: irresponsible lending - failure to conduct adequate affordability checks before credit limit increases complaint against JD Williams & Company Limited (JDW) / Shop Direct Finance Company Limited

Decision detail

Summary

Miss G complained that JDW lent to her irresponsibly by providing and repeatedly increasing her catalogue shopping account credit limit between 2016 and 2021, reaching £2,000, despite her experiencing severe financial instability and mental health challenges. JDW increased the limit 8 times from an initial £125, with the most significant increases occurring in quick succession in 2020. The ombudsman found that while JDW should have conducted more thorough affordability checks before increases to £1,500 and above, such checks would likely have revealed Miss G had sufficient disposable income to afford the increases, and JDW should not have been aware of her vulnerability through reasonable and proportionate checks. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that for the initial account opening with a low £125 limit, JDW was not required to conduct extensive checks, and while Miss G claimed to have been signed off work and receiving benefits, she provided vague information about timeframes and credit history, making it impossible to say JDW shouldn't have opened the account. For credit limit increases 1-4 (up to £900), JDW's checks were sufficient given Miss G's account management and lack of adverse credit information. For increases 5-6 (to £1,300 and £1,500), while JDW should have conducted additional checks on income and expenditure, the ombudsman's review of Miss G's bank statements showed she had approximately £1,800 monthly income and sufficient disposable income after rent (£400), existing creditor payments (£200), and bills (£140) to afford repayments. The ombudsman concluded that Miss G's spending pattern on the JDW account was not indicative of compulsive spending and she did not appear to have high levels of credit elsewhere, so JDW should not have been aware of her vulnerability through reasonable and proportionate checks. For increase 7 (to £1,750), similar reasoning applied. The ombudsman also found JDW acted fairly in selling the debt and did not act wrongly in taking the March 2025 payment as the transfer was not completed until May 2025.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website