Not upheld: irresponsible lending complaint against Clydesdale Bank Plc trading as Virgin Money

Decision detail

Summary

Mr F complained that Virgin Money irresponsibly approved three credit cards (£7,000, £8,000, and £8,000 limits) between November 2021 and August 2024, which he could not afford to repay due to a long-term gambling addiction. The ombudsman reviewed Virgin Money's lending decisions for each card, examining the income verification, credit checks, and card management history. Although Mr F's representative provided bank statements showing gambling transactions, the ombudsman found that Virgin Money was not required to conduct such deep checks and that no signs of financial difficulty were evident in the statements available at the time of each application. The complaint was not upheld as the firm's checks were reasonable and proportionate, and it made fair lending decisions based on the information it had or should have obtained.

The Ombudsman's reasoning

The ombudsman applied the FCA's approach to irresponsible lending complaints, focusing on whether Virgin Money conducted reasonable and proportionate checks and made fair lending decisions. For Card 1, the ombudsman found Virgin Money's income verification through CATO checks and use of household income was reasonable, and the credit history was satisfactory. Even if bank statements had been reviewed, no signs of financial difficulty or gambling were evident at that time. For Card 2, the money transfers were noted but did not automatically indicate harmful spending, and card management remained good. For Card 3, the proximity of the application to the closure of previous cards would have prompted review of prior card management, which was positive. The ombudsman concluded that the secretive nature of gambling spending meant Virgin Money neither knew nor ought to have known about it, and was not required to conduct deeper checks to uncover it.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website