Not upheld: irresponsible lending - inadequate affordability checks complaint against NewDay Ltd

Decision detail

Summary

Miss K complained that NewDay irresponsibly provided her with a Fluid Credit Card account in March 2021 with a £2,000 limit and subsequently increased it to £3,000 in October 2021. The ombudsman found that NewDay's affordability checks were not proportionate, particularly given Miss K's history of late payments and over-limit spending on other credit cards, significantly fluctuating income verification, and increasing credit commitments. However, the complaint was not upheld because Miss K could not provide bank statements to establish whether NewDay's estimated figures were inaccurate, and without such evidence, the ombudsman could not conclude that unfair lending decisions were made. The ombudsman noted that while Miss K subsequently struggled with repayments and required payment holidays, this did not necessarily indicate irresponsible lending at the time of the original decisions.

The Ombudsman's reasoning

The ombudsman found that NewDay failed to complete proportionate affordability checks at both account opening and credit limit increase, particularly given the inconsistent income figures, evidence of payment struggles on other accounts, and significant increases in credit commitments. However, without Miss K's bank statements covering the relevant periods, the ombudsman could not definitively establish that the estimated figures used in NewDay's affordability calculations were inaccurate or that unfair lending decisions were made. The ombudsman noted that each complaint must be assessed on its own merits, and that post-lending difficulties (payment holidays and repayment plans) do not necessarily indicate irresponsible lending at the time of the original decision.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website