Not upheld: irresponsible lending and unaffordable credit complaint against MBNA Limited

Decision detail

Summary

Mr W complained that MBNA irresponsibly provided him with an unaffordable credit card with an original limit of £5,300 in July 2018 and increased it to £10,000 in October 2020, and failed to act on signs of financial difficulty. Mr W argued that proportionate checks would have identified he was overindebted and that his volatile contractor income should have warranted more detailed checks. The ombudsman found that for the original lending, insufficient documentary evidence prevented a conclusion of unfairness, and for the October 2020 increase, MBNA's checks were proportionate and identified no concerns. The ombudsman also found that when financial difficulties emerged in 2024, MBNA appropriately identified persistent debt, engaged with Mr W, provided forbearance including a payment freeze, and reasonably withdrew the facility when Mr W could not maintain required payments. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied section 140A of the Consumer Credit Act 1974 to assess whether the credit relationship was unfair. For the original July 2018 lending, insufficient documentary evidence was available from either party to determine what proportionate checks would have revealed, so unfairness could not be reasonably concluded. For the October 2020 limit increase, MBNA's checks were proportionate: income was validated through industry-recognised online verification, housing costs and credit commitments were evidenced through credit checks, and living expenses were estimated using industry statistical data. No adverse credit data was present and Mr W had managed the account well. The ombudsman found Mr W had not informed MBNA of his concerns about income volatility or contract end date. Regarding ongoing management, Mr W's account usage remained within limits until mid 2024 and payments exceeded minimums, so MBNA had no reason for concern. When financial difficulties emerged, MBNA appropriately identified persistent debt status, engaged with Mr W, provided forbearance including a payment freeze, and reasonably withdrew the facility when Mr W could not maintain required payments.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website