Not upheld: irresponsible lending - failure to make appropriate affordability checks complaint against NewDay Ltd trading as John Lewis Partnership Credit Card

Decision detail

Summary

Mr C complained that NewDay lent irresponsibly by failing to make appropriate affordability checks before issuing a credit card in October 2022 and before three subsequent credit limit increases through May 2024. Mr C argued that proper checks would have revealed he was heavily indebted with multiple credit cards and that further lending was unsustainable. NewDay maintained that comprehensive assessments showed sufficient disposable income at each stage. The ombudsman found that NewDay's use of ONS datasets combined with validated income and credit file information was reasonable and proportionate, that no adverse credit indicators were present at any lending decision, and that calculated disposable income supported sustainable repayment at each stage, resulting in the complaint not being upheld.

The Ombudsman's reasoning

The ombudsman found that NewDay's use of ONS datasets for estimating non-discretionary expenditure was reasonable and proportionate industry practice, particularly as it was not used in isolation but supported by application data and third party credit agency information. The ombudsman rejected Mr C's arguments that retrospective analysis using materials not available to NewDay at the time (such as current account records and post-dated credit file reports) should be considered. The key finding was that at each lending decision, the credit file showed no adverse indicators, disposable income calculations showed sufficient funds for sustainable repayment, and the amounts of incremental credit offered were relatively low in relation to Mr C's declared income. While debt utilisation was rising, this was not accompanied by any signs of financial distress in the credit file that would have prompted further checks.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website