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

Decision detail

Summary

Mr P complained that Virgin Money irresponsibly lent him a £4,000 credit card in October 2021 given his existing debt levels. Virgin Money had obtained information on Mr P's £59,000 annual income and conducted a credit search showing no recent payment difficulties. The ombudsman found the lender's checks were proportionate and reasonable, particularly given the 0% balance transfer promotional rate which allowed Mr P to repay existing debt more quickly at lower interest. Although the ombudsman acknowledged that more thorough checks into living expenses could have been proportionate given the amount lent, such checks would not have revealed any unaffordability. 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 lender obtained information on income and conducted a credit search, both of which indicated Mr P could afford the monthly repayments. The 0% balance transfer offer meant Mr P could repay existing debt more quickly and at lower interest, which was a mitigating factor. While the ombudsman acknowledged that more thorough checks into living expenses could have been proportionate given the amount lent, such checks would not have revealed that Mr P couldn't afford the payments. The ombudsman distinguished this case from Mr P's other upheld complaint by noting the 0% promotional rate here versus a high interest rate in the other case, and the different debt levels at the respective times of application.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website