Not upheld: irresponsible lending complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr M complained that HSBC irresponsibly approved his credit card application in April 2023 with a £6,000 limit, arguing the firm failed to adequately assess his credit file and should have requested detailed income and expenditure information. HSBC verified Mr M's income at £3,355 monthly, obtained housing costs and debt commitments from Credit Reference Agencies, and estimated disposable income at £1,201 using ONS data. The ombudsman found the checks were proportionate and the lending decision fair, as Mr M's credit file showed good debt management with no arrears, and even accounting for his actual higher mortgage payments and non-discretionary expenditure, he retained sufficient disposable income to afford sustainable repayments. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that HSBC's checks were proportionate to the circumstances. Although the checks could have been more thorough, HSBC verified income through CRAs, obtained housing costs and debt commitments from CRAs, and estimated essential living costs using ONS data. The estimated disposable income of £1,201 left sufficient buffer even accounting for Mr M's actual higher mortgage payments and non-discretionary expenditure. The credit check showed Mr M was managing existing debt well with no arrears. Even if HSBC had discovered Mr M's actual expenditure was higher than estimated, he would still have had enough disposable income to afford sustainable repayments on the £6,000 credit limit. The unarranged overdraft usage appeared to result from non-essential spending rather than financial difficulty.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website