Not upheld: Irresponsible lending complaint against Clydesdale Bank Plc

Decision detail

Summary

Miss M complained that Virgin Money irresponsibly lent to her by providing a credit card with a £3,100 limit when she already had significant existing debt. Virgin Money had obtained information on Miss M's income (approximately £25,000 per year), verified it against bank deposits, and conducted a credit search showing existing debts but no recent payment difficulties or defaults. The ombudsman found the checks were proportionate for the early stage of a lending relationship and the credit limit did not require excessive monthly repayments. Although Miss M subsequently experienced difficulty making payments, the ombudsman concluded Virgin Money did not act irresponsibly and the complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the FOS approach to irresponsible lending, requiring proportionate checks appropriate to the circumstances. For a revolving credit facility with a £3,100 limit, less thorough checks were reasonable at the early stage of the lending relationship. Virgin Money's checks (income verification and credit search) were proportionate. The credit limit did not require particularly large monthly repayments. Miss M's declared income of £25,000, verified against bank deposits, and her living situation with parents, suggested affordability. The absence of payment difficulties or defaults in her credit history supported the lending decision. The 0% balance transfer offer provided Miss M significant opportunity to reduce existing debt. Even if Virgin Money had obtained more detailed information about living expenses, the ombudsman found no evidence that actual expenses were significantly higher than estimates, so it would not have changed the lending decision.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website