Not upheld: Irresponsible lending complaint against Clydesdale Bank Plc trading as Virgin Money

Decision detail

Summary

Mr S complained that Virgin Money lent irresponsibly by approving a £3,600 credit card in August 2022 and failed to treat him fairly. The FOS investigator upheld the complaint, but the ombudsman disagreed. The ombudsman found that Virgin Money conducted proportionate checks by verifying Mr S's declared income of £36,000 using CATO (confirmed accurate by HMRC evidence), appropriately considering joint household income and expenses under regulatory framework, and assessing his existing debt of £27,300 (largely a car lease). The ombudsman rejected the view that Mr S was overindebted and found no requirement for enhanced checks or refusal. Post-approval, Virgin Money appropriately managed the account and treated Mr S fairly. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman concluded that Virgin Money's checks were proportionate to the credit limit offered. The income verification via CATO was appropriate for a credit card application, and HMRC evidence confirmed Mr S's declared income was accurate. The use of joint household income was justified under CONC 5.2A.12R as Mr S had an established financial association and shared household expenses. The use of ONS data for non-discretionary expenditure was reasonable and within regulatory framework. The ombudsman rejected the investigator's view that Mr S was overindebted, finding that having debt equal to annual salary does not constitute overindebtedness requiring enhanced checks. The car lease, while substantial, was a different type of debt used to purchase an asset. Virgin Money was not required to conduct bank statement reviews or more extensive checks than it performed. Post-approval, Virgin Money appropriately managed persistent debt issues and treated Mr S fairly by offering interest waivers and assistance.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website