Not upheld: irresponsible lending and inadequate affordability checks complaint against NewDay Ltd trading as Marbles

Decision detail

Summary

Mr I complained that NewDay lent irresponsibly by approving a credit card and five subsequent limit increases without adequate affordability checks. NewDay initially approved a £1,200 credit card in September 2019 and increased the limit five times over the following years to £6,450. Mr I argued the checks were inadequate and the increases were unaffordable, leading him to become reliant on debt. The ombudsman found that while the initial checks were not fully proportionate, reasonable checks would have shown affordability. For subsequent increases, NewDay's checks were proportionate and showed affordability. Importantly, the increases from February 2021 onwards were never utilised (account balance never exceeded £3,800), so Mr I suffered no financial loss. The account showed responsible management with all payments made on time and often exceeding minimums. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the regulatory requirement for proportionate checks assessing affordability and sustainable repayment. While the initial account opening checks were not fully proportionate given the high debt-to-income ratio, reasonable checks would have shown affordability based on Mr I's actual expenses and disposable income. For subsequent increases, NewDay's checks were proportionate and showed affordability. Critically, the third, fourth and fifth increases were not utilised, so Mr I suffered no financial loss. The account showed no signs of financial difficulty - all payments were made on time, often exceeding minimums, and the balance remained well under limits.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website