Upheld: irresponsible lending - inadequate affordability checks complaint against Clydesdale Bank PLC trading as Virgin Money
Financial Ombudsman decision DRN-6334847 of 2026-05-18T00:00:00+00:00. irresponsible lending - inadequate affordability checks complaint against Clydesdale Bank PLC trading as Virgin Money. Outcome: Upheld.
Decision detail
| Reference | DRN-6334847 |
|---|---|
| Decision date | 2026-05-18T00:00:00+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 rework both accounts removing all interest, fees and charges. If a credit balance results, refund to Ms B with 8% simple interest per year from date of each overpayment to settlement. If an outstanding balance remains, arrange an affordable payment plan with Ms B. Remove all adverse information regarding these accounts from Ms B's credit file once cleared. |
Summary
Ms B complained that Virgin Money irresponsibly approved two credit cards (Card1 in November 2021 for £7,200 and Card2 in February 2024 for £4,600) when she was struggling financially with £33,000 in unsecured debts, a gambling addiction, and insufficient income to meet her existing commitments. Virgin relied on household income-based affordability assessments and CRA data showing no defaults or missed payments, arguing the lending was affordable. The ombudsman upheld the complaint, finding Virgin's household-based approach was not sufficiently borrower-focused. Ms B's actual net monthly income (£1,205 at Card1 approval) was substantially lower than Virgin's calculations, and her personal share of household debts and expenses exceeded her income at both approval dates. The ombudsman ordered Virgin to remove all interest, fees and charges from both accounts and either refund any credit balance with interest or arrange an affordable repayment plan for any remaining balance.
The Ombudsman's reasoning
The ombudsman found that while Virgin's household income-based assessment may be legitimate in some circumstances, it was not borrower-focused as required by FCA guidance. Ms B's high debt-to-income ratio (114%) should have triggered further investigation. Bank statements would have revealed her actual net monthly income was substantially lower than Virgin's calculations. Using a fair assessment of Ms B's individual share of household debts and expenses, her personal expenditure exceeded her net income at both approval dates, making the lending unaffordable and unsustainable. Virgin should have discovered this through proper affordability checks.
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