Not upheld: irresponsible lending and unaffordable credit provision complaint against Clydesdale Bank Plc t/a Virgin Money

Decision detail

Summary

Miss D complained that Virgin Money irresponsibly provided her with a credit card in June 2019 with a £4,100 limit and later increased it to £4,600 in October 2020, claiming the credit was unaffordable and Virgin Money failed to conduct sufficient affordability checks. Miss D argued that as a student with no income in June 2019, high credit utilisation, her stress and ADHD, and confusing communication about interest rates demonstrated irresponsible lending. Virgin Money maintained they had conducted reasonable checks based on Miss D's declared income of £23,718, verified through CATO data, and found sufficient disposable income of £743 monthly with no adverse credit indicators. The ombudsman found Virgin Money's checks were reasonable and proportionate, their lending decisions were fair, and rejected Miss D's additional arguments as either not foreseeable or not disclosed at the time of lending, ultimately not upholding the complaint.

The Ombudsman's reasoning

The ombudsman applied FCA CONC rules on responsible lending and found that Virgin Money's checks were reasonable and proportionate to the amount and type of credit. At card issuance, Miss D's declared income was verified, her assessed disposable income of £743 monthly was sufficient to cover repayments with ample surplus, and her credit file showed no adverse indicators. At the credit limit increase after 16 months, there remained no missed payments, defaults, or adverse information, and the increase was modest. The ombudsman rejected Miss D's arguments that high credit utilisation indicated unaffordability (as this was not foreseeable at lending), that she lacked a route out of difficulties (Virgin Money complied with persistent debt obligations), and that Virgin Money should have known of her stress and ADHD (not disclosed). The ombudsman also found the promotional terms and interest rates were clearly communicated in the original terms provided.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website