Not upheld: irresponsible lending / inadequate affordability checks complaint against Shop Direct Finance Company Limited (trading as Very)

Decision detail

Summary

Miss A complained that Shop Direct irresponsibly granted her credit she could not afford to repay by failing to conduct adequate affordability checks before opening her catalogue account and increasing her credit limit four times between March 2019 and November 2020. The ombudsman considered the complaint under Section 140A of the Consumer Credit Act 1974 as relating to the fairness of the lending relationship. While acknowledging that Shop Direct's affordability checks could have been more thorough, the ombudsman found that the available evidence, including bank statements, did not indicate Miss A was in financial difficulty at the time of the lending decisions. The ombudsman concluded that Shop Direct made fair lending decisions and did not create an unfair relationship with Miss A, and therefore did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman applied Section 140A of the Consumer Credit Act 1974 to assess whether the relationship between Shop Direct and Miss A was unfair. While the ombudsman acknowledged that Shop Direct could have carried out better checks at the first and second credit limit increases, the available evidence (including bank statements) did not show Miss A was struggling financially. The ombudsman was satisfied that Shop Direct made fair lending decisions for the credit limit increases and did not create unfairness through irresponsible lending. Additionally, Shop Direct handled Miss A's financial difficulty appropriately when she contacted them in May 2024.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website