Not upheld: irresponsible lending and unfair credit relationship complaint against Barclays Bank UK PLC (trading as Barclaycard)

Decision detail

Summary

Miss P complained that Barclaycard irresponsibly provided her with a credit card in February 2019 with a £4,000 limit that she found unaffordable and which took years to repay. Barclaycard initially rejected the complaint as out of time, but the ombudsman considered it as a complaint about the fairness of the lending relationship under section 140A of the Consumer Credit Act 1974. The ombudsman found that Barclaycard's checks were proportionate for an early-stage lending relationship, based on Miss P's declared income of £20,000, low credit utilisation, and living situation. Although Miss P's financial circumstances subsequently worsened, this was not foreseeable at the time of application. The ombudsman also found no unfairness in the firm's ongoing account management, as Miss P did not meet persistent debt criteria and consistently made payments exceeding the minimum since April 2020. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied section 140A of the Consumer Credit Act 1974 to assess whether the lending relationship was unfair. For the initial lending decision, the ombudsman found that Barclaycard's checks were proportionate given the early stage of the relationship, Miss P's declared income of £20,000, her low credit utilisation relative to income, and her living situation. The £4,000 credit limit was reasonably sized for monthly repayments within a reasonable period. Regarding ongoing use, the ombudsman found Miss P did not meet the persistent debt criteria as she consistently made payments exceeding the minimum since April 2020 and regularly reduced her balance. The ombudsman noted that Miss P's subsequent financial difficulties were not foreseeable at the time of application.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website