Not upheld: Irresponsible lending complaint against Clydesdale Bank plc t/a Virgin Money

Decision detail

Summary

Mrs B complained that Virgin Money irresponsibly lent her a credit card with a £3,400 limit in April 2024 without conducting proportionate affordability checks. Virgin Money assessed household income at £4,603.49 monthly and found sufficient disposable income after accounting for housing, other expenditure, and existing credit commitments totalling £38,233. The ombudsman found that while Virgin Money's checks examining household rather than individual circumstances were arguably not proportionate, further investigation into Mrs B's actual three-month income (approximately £2,997 including benefits) and expenditure (approximately £2,500) would have shown the credit was affordable. The ombudsman also rejected Mrs B's arguments regarding her vulnerability and stress, finding Virgin Money should not have been aware of these circumstances at the time of lending. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a two-stage analysis. First, whether Virgin Money's checks were reasonable and proportionate: the ombudsman found it arguable but noted that if they were, the card was affordable. Second, if the checks were inadequate, whether further investigation would have revealed affordability: the ombudsman found that examining Mrs B's individual three-month income and expenditure would have shown sufficient disposable income to cover the card and day-to-day expenses. Either way, the lending was affordable and the decision was fair. The ombudsman also found no breach of Consumer Duty obligations and no unfairness under Section 140A of the Consumer Credit Act 1974.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website