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

Decision detail

Summary

Mrs R complained that Virgin Money irresponsibly provided her with a £4,000 credit card in January 2025 when she already had substantial existing debt and subsequently used the card to gamble. Virgin Money conducted credit checks and verified Mrs R's declared income of £60,000 but did not obtain bank statements. The ombudsman found that while Virgin Money should have conducted further checks given the existing debt and discrepancy in calculated living costs, a proportionate check for a £4,000 revolving credit facility at the early stage of the relationship was reasonable. Even with further enquiries, the card would have been considered affordable based on Mrs R's income and actual £1,400 monthly contribution to household costs. The complaint was not upheld as Virgin Money did not act irresponsibly in lending.

The Ombudsman's reasoning

The ombudsman found that while Virgin Money should have conducted further checks given Mrs R's existing debt and the discrepancy between calculated household living costs and actual costs, a proportionate check at the early stage of a lending relationship with a £4,000 credit limit was reasonable. The credit limit did not require especially high monthly payments to clear within a reasonable period. Even if Virgin Money had made further enquiries and discovered Mrs R's actual £1,400 monthly contribution to household costs, combined with her checked income and known credit commitments, the card would still have been considered affordable. Virgin Money was not required to obtain bank statements to conduct a proportionate check and therefore would not have discovered the gambling or credit-to-credit borrowing. The ombudsman rejected the argument that a similar complaint upheld for a different lender sets a precedent, as each case must be considered on its individual circumstances.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website