Partially upheld: irresponsible lending - inadequate affordability checks for credit limit increase complaint against Clydesdale Bank Plc trading as Virgin Money
Financial Ombudsman decision DRN-6337557 of 2026-05-19T00:00:00+00:00. irresponsible lending - inadequate affordability checks for credit limit increase complaint against Clydesdale Bank Plc trading as Virgin Money. Outcome: Partially upheld.
Decision detail
| Reference | DRN-6337557 |
|---|---|
| Decision date | 2026-05-19T00:00:00+00:00 |
| Firm | Clydesdale Bank Plc trading as Virgin Money |
| Product | credit card |
| Claim type | irresponsible lending - inadequate affordability checks for credit limit increase |
| Outcome | Partially upheld |
| Remedy | Virgin Money must: (1) re-work the credit card account removing all interest, fees, charges and insurances applied to balances above £7,500 from June 2022 onwards; (2) if a credit balance results, refund it with simple interest at Bank of England base rate plus one percentage point from the date of overpayment; (3) if a balance remains, arrange an affordable repayment plan; (4) once the balance is paid, remove any adverse credit file information recorded since June 2022. |
Summary
Miss F complained that Virgin Money irresponsibly provided her with a credit card and subsequently increased her credit limit without proper affordability checks. The ombudsman found the initial £7,500 credit limit in October 2019 was fair based on Virgin Money's verification of her declared £50,000 income and assessment of her circumstances. However, the June 2022 increase to £12,500 was unfair because Virgin Money failed to conduct adequate checks despite more than two years passing and significant changes in her circumstances being visible on her credit file, including increased unsecured debt and a new mortgage. The ombudsman determined that proper checks would have revealed Miss F had lost her job and lacked sufficient income to cover her housing costs and existing credit commitments. Virgin Money must remove all interest, fees, charges and insurances applied to balances above £7,500 from June 2022 onwards and arrange an affordable repayment plan for any remaining balance.
The Ombudsman's reasoning
The ombudsman found that Virgin Money's initial affordability checks for the £7,500 credit limit were reasonable and proportionate given the information available at account opening. However, for the June 2022 limit increase, Virgin Money failed to conduct adequate checks despite more than two and a half years having passed and substantial changes in Miss F's circumstances being visible on her credit file (increased unsecured debt from £24,500 to £31,500 and a new mortgage). Had Virgin Money verified Miss F's income and living expenses at the time of the increase, it would have discovered she had lost her job and that her remaining income was insufficient to cover her housing costs and existing credit commitments, making the additional borrowing unsustainable.
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