Not upheld: irresponsible lending - inadequate affordability assessment complaint against Clydesdale Bank Plc trading as Virgin Money

Decision detail

Summary

Mr C complained that Virgin Money irresponsibly lent to him by approving a credit card in June 2019 and increasing the credit limit in June 2023 without conducting proper affordability assessments. He claimed the lending trapped him in persistent debt and caused financial stress, and sought refunds of interest and charges, credit file remediation, and compensation. The ombudsman found that Virgin Money's checks were reasonable and proportionate, relying on verified income of £1,428 monthly, CRA data showing no adverse history, and account conduct demonstrating responsible management. The ombudsman rejected arguments that more detailed income verification was required and found no evidence of financial difficulty at the time of either lending decision, resulting in the complaint being not upheld.

The Ombudsman's reasoning

The ombudsman applied the FCA's Consumer Credit Sourcebook (CONC) rules requiring reasonable and proportionate affordability assessments. For the initial approval, Virgin Money's checks were reasonable given the information available showed no adverse credit history, a positive income-to-debt ratio with approximately £838 monthly disposable income after existing commitments, and the credit was used for a balance transfer that improved Mr C's financial position by reducing borrowing costs. For the credit limit increase, the checks were reasonable as CRA data showed no deterioration, the account had been managed well with consistent payments above minimum, no adverse indicators were present, and even with the increased limit Mr C would have had approximately £586 estimated disposable income. The ombudsman rejected arguments that more detailed income verification (payslips/bank statements) was required, as the rules focus on whether checks overall were sufficient rather than requiring specific documents, and the income figure was consistent with CRA data. The ombudsman also considered the Consumer Credit Act 1974 s140A but found no basis for a different outcome.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website