Not upheld: irresponsible lending complaint against HSBC UK Bank Plc

Decision detail

Summary

Miss A complained that HSBC irresponsibly lent to her by approving a £3,000 credit card in April 2024 and increasing the limit to £3,500 in November 2024. Miss A argued she was overdraft-dependent, had exceeded her credit limit, and was recycling debt. The ombudsman found that although HSBC did not provide full account opening checks, further checks would have shown the lending was affordable based on Miss A's actual income (which exceeded her declaration), her shared household expenses with her partner, and the modest increase in her loan repayments. For the credit limit increase, the ombudsman found no detriment as Miss A incurred no additional charges after the increase and could have declined it. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the principle that lenders must make proportionate checks considering income, credit history, repayment amounts, and personal circumstances. Although HSBC did not provide full account opening checks, the ombudsman took a cautious approach and examined what further checks would have revealed. Bank statement analysis showed Miss A's actual income exceeded her declaration, she had arranged overdraft facilities (not automatically indicating unaffordability), and her debt consolidation loan was for legitimate purposes with only a modest monthly increase of £56.48. The ombudsman found that shared household expenses with her partner (evidenced by transfers to a joint account) meant Miss A would not bear all household costs. The ombudsman concluded that even with further checks, the lending would have appeared affordable and sustainable. For the credit limit increase, no detriment was demonstrated as Miss A incurred no additional charges after the increase and had the opportunity to decline it.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website