Not upheld: irresponsible lending complaint against Clydesdale Bank Plc (trading as Virgin Money)

Decision detail

Summary

Miss S complained that Virgin Money irresponsibly lent to her by providing a £5,200 credit card when she already had significant debt. Virgin Money had obtained information on her £33,000 annual income and conducted a credit search showing no recent payment difficulties and existing debts of around £15,000. Miss S intended to transfer a £4,000 balance at 0% interest to the card. The ombudsman found the checks were proportionate, the debt-to-income ratio was sustainable, and the balance transfer would reduce her overall interest burden. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Virgin Money's checks were proportionate for the early stage of a lending relationship. The debt-to-income ratio was not unsustainably high at approximately 45%. The credit card was a revolving facility requiring reasonable monthly repayments rather than full repayment. Miss S's intention to transfer existing balance at 0% interest meant she would save interest and make larger inroads into her balance, suggesting the lending was not unsustainably increasing her indebtedness. Even if Virgin Money had obtained more detailed information about living expenses, there was no evidence this would have changed the lending decision.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website