Not upheld: irresponsible lending - proportionality of affordability checks complaint against Bank of Scotland plc trading as Halifax

Decision detail

Summary

Mr S complained that Halifax irresponsibly lent him a £9,000 credit card limit in December 2023 without completing adequate affordability checks. He argued that a thorough review of his bank statements would have shown he could not afford the limit. Halifax defended its decision, stating it had completed proportionate checks including income verification (£51,000 per year), credit searches, and assessment of disposable income (approximately £808 monthly). The ombudsman found the checks were proportionate and the information gathered supported the lending decision, with Mr S's existing credit commitments being relatively low at £378 per month. Although Mr S later experienced financial difficulties and stopped payments in April 2024, the ombudsman did not find this retrospectively invalidated the original lending decision. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Halifax's checks were proportionate to the nature of the lending (a credit card with a £9,000 limit). The checks explored Mr S's existing credit commitments, income, and essential expenditure. The information gathered suggested Mr S could sustainably afford the limit, with estimated monthly disposable income of £808 and relatively low existing credit commitments of £378 per month. A detailed review of bank statements was not required under CONC and would have been excessive. The credit card's 0% balance transfer offer was potentially beneficial rather than indicative of financial hardship. Later financial difficulties did not retrospectively make the original lending decision irresponsible.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website