Not upheld: irresponsible lending - credit limit increases complaint against MBNA Limited

Decision detail

Summary

Mr C complained that MBNA irresponsibly approved a credit card with a £7,800 limit in September 2020 and subsequently increased it to £11,300 in September 2022, despite Mr C making only minimum payments and utilising high credit utilisation. MBNA had already accepted that the November 2024 increase to £12,800 was unaffordable and provided a refund. The ombudsman found that MBNA's checks for the initial card and 2022 increase were proportionate based on Mr C's verified income of approximately £2,060-£2,410 monthly, existing credit commitments of £429-£700 monthly, and clean payment history with no defaults or CCJs. Although the ombudsman acknowledged that further checks into living costs would have been proportionate for the 2022 increase, it concluded such checks would likely have shown affordability. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the FOS approach to irresponsible lending, requiring proportionate checks based on the stage of the lending relationship and risk factors. For the initial card approval, the checks were proportionate given the modest credit limit, stable income, and absence of adverse information. For the September 2022 increase, while further checks into living costs would have been proportionate given the two-year gap and increased indebtedness, the ombudsman concluded that proportionate checks (not forensic analysis of bank statements) would likely have shown Mr C could afford the increase. The ombudsman also considered Mr C's responsible use of the card over two years as evidence supporting affordability. The ombudsman rejected Mr C's argument that MBNA's acceptance of the November 2024 increase automatically meant earlier increases were unaffordable, as each decision must be assessed on its own merits.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website