Partially upheld: Irresponsible lending complaint against Shop Direct Finance Company Limited

Decision detail

Summary

Miss B complained that Shop Direct irresponsibly provided her with an unaffordable catalogue shopping account in November 2020 with a £2,500 credit limit, arguing that proportionate checks would have identified she was overindebted. The ombudsman found that while Shop Direct's checks were not proportionate in assessing non-discretionary expenditure, bank statements showed Miss B had reasonable disposable income to afford the facility, making the original lending decision fair. The complaint was partially upheld only regarding customer service failures, including Shop Direct's failure to fully answer complaint points and issues with payment date changes. Shop Direct was directed to refund three administration charges from 2023 and pay £24 compensation.

The Ombudsman's reasoning

The ombudsman found that while Shop Direct's checks were not proportionate (failing to assess non-discretionary expenditure), the original lending decision was fair because bank statements showed Miss B had reasonable disposable income after accounting for her declared income of £21,500 and regular committed expenditure. The ombudsman determined that proportionate checks would more likely than not have shown the lending was affordable. The September 2025 credit limit increase, while concerning as it occurred after Miss B's complaint, caused no financial detriment as Miss B never utilised the increased limit. The ombudsman upheld the complaint only regarding customer service failures, specifically Shop Direct's failure to fully answer all complaint points and the payment date change issue.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website