Upheld: irresponsible lending - inadequate affordability checks complaint against Clydesdale Bank Plc trading as Virgin Money
Financial Ombudsman decision DRN-6305393 of 2026-04-21T00:00:00+00:00. irresponsible lending - inadequate affordability checks complaint against Clydesdale Bank Plc trading as Virgin Money. Outcome: Upheld.
Decision detail
| Reference | DRN-6305393 |
|---|---|
| Decision date | 2026-04-21T00:00:00+00:00 |
| Firm | Clydesdale Bank Plc trading as Virgin Money |
| Product | credit card |
| Claim type | irresponsible lending - inadequate affordability checks |
| Outcome | Upheld |
| Remedy | Virgin Money must: (1) rework the account removing all interest, fees, charges, and insurances; (2) if a credit balance results, refund it with 8% simple interest per year from date of overpayment; (3) if an outstanding balance remains, arrange an affordable repayment plan; (4) remove all adverse information from Miss N's credit file once cleared; (5) if debt sold to third party, buy it back or ensure third party implements the redress; (6) deduct tax from interest awards as required by HMRC. |
Summary
Miss N complained that Virgin Money irresponsibly lent to her by approving a £9,900 credit card in September 2024 without conducting adequate affordability checks. Virgin Money relied on household income figures and CRA data showing no adverse information, calculating disposable income of around £917 per month. However, the ombudsman found that warning signs including seven cash advances totalling £1,750 in the prior three months, £25,000+ existing debt, and dependence on household income rather than Miss N's sole income should have triggered further investigation. Examination of Miss N's actual bank statements revealed limited disposable income after essential expenses, regular overdraft reliance, and stress-related lifestyle spending. The ombudsman upheld the complaint and ordered Virgin Money to remove all interest and charges, refund any credit balance with interest, and arrange an affordable repayment plan for any remaining balance.
The Ombudsman's reasoning
The ombudsman found that whilst Virgin Money's calculations showed adequate disposable income, several warning signs should have prompted more thorough investigation: seven cash advances totalling £1,750 in three months, significant existing debt, reliance on household income rather than Miss N's sole income without verification of sustainability, and a high credit limit of £9,900. When the ombudsman examined Miss N's actual bank statements, they revealed limited disposable income after essential expenditure, regular overdraft reliance, and lifestyle spending driven by financial stress. The ombudsman concluded that reasonable and proportionate checks would have revealed Miss N's financial position was unsustainable and that providing additional credit was unfair.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Clydesdale Bank Plc trading as Virgin Money, all decisions | 82 | 22% |
Source
Read the original decision on the Financial Ombudsman Service website