Not upheld: irresponsible lending / unaffordable credit complaint against Clydesdale Bank Plc (trading as Virgin Money)

Decision detail

Summary

Mr H complained that Virgin Money irresponsibly lent to him by providing a £4,000 credit card that was unaffordable given his existing commitments. Virgin Money had obtained Mr H's income information (£44,000 per annum) and conducted a credit search showing no adverse history. The ombudsman found Virgin Money's checks were proportionate for the early stage of a lending relationship and that the information available at the time supported the lending decision. Although Mr H's credit file later showed a spike in borrowing and he experienced financial difficulty, the ombudsman declined to use hindsight and found Virgin Money had not acted unfairly. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the FOS approach to irresponsible lending, noting that proportionate checks are required at the early stages of a lending relationship. Virgin Money's checks—obtaining income information and conducting a credit search—were proportionate for a £4,000 revolving credit facility. The information gathered showed no inconsistencies or adverse indicators. The ombudsman rejected using hindsight regarding Mr H's later financial difficulties, as the credit file spike occurred after the lending decision and Virgin Money could not reasonably have known about it at the time.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website