Not upheld: irresponsible lending complaint against Madison CF UK Limited trading as 118 118 Money

Decision detail

Summary

Miss B complained that Madison lent irresponsibly when issuing a £1,200 credit card in November 2021, claiming the limit was unaffordable and resulted in financial difficulties. An FOS investigator upheld the complaint, citing insufficient checks and negative disposable income when considering recent BNPL finance. However, the ombudsman disagreed, finding Madison conducted reasonable and proportionate checks by verifying income, estimating expenditure based on credit file data and statistical evidence, and calculating adequate disposable income of approximately £490. The ombudsman found the credit limit modest relative to verified income, the adverse credit history appropriately treated as historic, and recent credit applications properly factored into expenditure calculations. The ombudsman also rejected Miss B's complaints about contact attempts, finding them reasonable and necessary, particularly after missed payments. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the FOS approach to irresponsible lending, considering whether Madison carried out reasonable and proportionate checks and made a fair lending decision. Madison verified Miss B's income and made reasonable estimates of her expenditure based on credit file data and statistical evidence, calculating disposable income of approximately £490. The £1,200 credit limit was modest relative to her verified income and the estimated disposable income. While Miss B had recent credit applications, these were factored into expenditure calculations. The adverse credit history from 2017 was over three years old and reasonably considered historic. The ombudsman rejected the investigator's view that BNPL finance should have been known to Madison, as such credit does not appear on credit files. The ombudsman also found Madison's contact attempts were reasonable and necessary, particularly after missed payments, and that Madison attempted to offer support when Miss B reported difficulties.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website