Not upheld: interest rate increase without adequate explanation complaint against JAJA Finance Ltd

Decision detail

Summary

Mr A complained that JAJA Finance Ltd increased his credit card interest rates substantially (from 33.19% to 41.24% on purchases and from 37.66% to 50.24% on cash transactions) without adequate explanation. Mr A accepted JAJA's contractual right to vary rates but argued the generic reference to 'market conditions' was insufficient and requested specific evidence-based reasons. The ombudsman did not uphold the complaint, finding that JAJA complied with the credit agreement terms, provided required notice, and offered Mr A the option to decline the increase or repay at the previous rate. The ombudsman rejected the argument that commercially sensitive details about funding costs or risk factors were required to be disclosed and found no evidence of unfair treatment.

The Ombudsman's reasoning

The ombudsman found that JAJA acted in accordance with the contractual terms by providing required notice and offering Mr A options to either accept the new rates or close the account and repay at the previous rate. The ombudsman determined that JAJA was not required to provide commercially sensitive details about funding costs or risk factors. Since the re-price was applied to multiple customers and not specific to Mr A, the ombudsman found no evidence of unfair or differential treatment. The ombudsman accepted that while Mr A had a contractual right to vary pricing, this satisfied the fairness requirement in the circumstances.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website