Not upheld: Irresponsible lending complaint against NewDay Ltd trading as Aqua

Decision detail

Summary

Miss P, aged 18 with limited credit history and in low paid employment, complained that NewDay irresponsibly approved a £900 credit card account without conducting sufficiently thorough affordability checks, despite her reliance on an overdraft facility. NewDay conducted credit reference agency checks and affordability assessment showing no obvious financial difficulties and net disposable income exceeding £900 per month. The ombudsman found the checks were reasonable and proportionate given the modest credit limit and NewDay's 'low and grow' lending strategy, and rejected the argument that the overdraft facility or Miss P's age should have triggered more extensive investigation.

The Ombudsman's reasoning

The ombudsman found that there are no set list of checks lenders must carry out, but they should be borrower-focused and proportionate to the amount and type of credit. Given that NewDay operates as a 'low and grow' lender providing credit to consumers with limited credit history, the level of due diligence expected was proportionate to the modest £900 credit limit. The checks NewDay conducted using CRA data and affordability assessment were reasonable and showed no obvious financial pressure or concerning debt levels. The ombudsman rejected the argument that the existence of an overdraft facility or Miss P's age should have triggered further investigation such as payslips or bank statements.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website