Not upheld: irresponsible lending - alleged insufficient affordability checks complaint against Capital One (Europe) plc

Decision detail

Summary

Miss S complained that Capital One irresponsibly lent to her when providing a £500 credit card in April 2021, alleging insufficient affordability checks were undertaken. Capital One defended their decision, stating they had conducted proportionate checks that revealed no concerns. The ombudsman found that Capital One's checks—including CRA data review, application information, and affordability assessment—were appropriate for the credit limit offered and revealed no red flags: no adverse credit history, approximately £500 monthly disposable income, and good credit repayment history. Although there was some disparity between declared housing costs and the mortgage balance, the ombudsman considered it reasonable for Capital One to rely on Miss S's declaration given the low credit limit and the likelihood that household members contributed to mortgage costs. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Capital One's affordability checks were proportionate to the circumstances, particularly given the relatively low £500 credit limit. The checks revealed no cause for concern: no adverse credit history, sufficient declared disposable income of approximately £500 monthly, and a good credit repayment history. While there was some disparity between the declared housing costs (£209) and the mortgage balance (£138,000), the ombudsman considered it reasonable for Capital One to rely on Miss S's declaration given she had already been asked this question in her application, the household income was significantly higher than her personal income suggesting others could contribute to mortgage costs, and the low credit limit meant further verification was unnecessary. Any financial difficulties Miss S later experienced would not have been apparent at the time of lending.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website