Not upheld: irresponsible lending complaint against J D Williams & Company Limited trading as Jacamo

Decision detail

Summary

Mr B complained that Jacamo lent irresponsibly when approving his catalogue shopping account in June 2018 and subsequently increasing his credit limit four times, despite him being in significant financial distress with approximately £50,000 in debt. Jacamo upheld the complaint regarding only the final credit limit increase in September 2023 and provided remedies including refunding interest and charges. The ombudsman found that while Jacamo's checks were not fully proportionate as they did not gather income information, the lending decisions were fair because the available evidence showed Mr B had sufficient income and disposable income to afford the credit, and he was managing his existing credit commitments well. The ombudsman did not uphold the complaint as information about Mr B's payday lending and overdraft use would not have been visible to Jacamo through standard Credit Reference Agency checks.

The Ombudsman's reasoning

The ombudsman applied the relevant regulations requiring proportionate checks considering the type, amount, duration and cost of credit alongside the borrower's circumstances. While Jacamo's checks were not fully proportionate as they did not gather income information, the ombudsman considered what information would have been available had proper checks been conducted. Using Mr B's bank statements as evidence of what would have been discoverable, the ombudsman found that for the initial account opening and first three credit limit increases, the lending amounts were affordable relative to Mr B's income and disposable income, and his management of existing credit was satisfactory. The ombudsman distinguished between information that should have been available through proportionate checks versus information about payday lending and overdraft use that would not have been visible to Jacamo. For the September 2023 increase, Jacamo had already upheld the complaint and provided appropriate remedies.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website