Not upheld: irresponsible lending - affordability assessment complaint against Marks & Spencer Financial Services plc trading as M&S Bank

Decision detail

Summary

Miss F complained that M&S irresponsibly approved a £4,000 credit card in November 2023 when she was struggling financially with high external debt levels. M&S defended its decision, stating it conducted reasonable affordability checks using verified income of £3,400 per month and calculated sufficient net disposable income of £1,103 monthly. The ombudsman found M&S's checks were reasonable and proportionate, noting Miss F's credit history showed well-managed borrowing with no adverse information, and that approximately £3,150 was used for balance transfers replacing existing debt. The complaint was not upheld as the lending decision was fair, supported by verified income calculations and Miss F's subsequent on-time payment performance.

The Ombudsman's reasoning

The ombudsman found that M&S carried out reasonable and proportionate affordability checks appropriate to the amount and type of borrowing. The checks used verified income data from bank account turnover rather than relying solely on declared income, which was a prudent approach. The ombudsman noted that Miss F's past credit history showed well-managed borrowing with no adverse indicators, and that the actual income verified through bank statements supported M&S's affordability calculations. The fact that approximately £3,150 was used for balance transfers at 0% interest meant existing debt was being replaced rather than added to. Post-approval, Miss F made all payments on time and maintained a good credit score, which supported the reasonableness of the lending decision.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website