Not upheld: irresponsible lending / inadequate affordability checks complaint against Barclays Bank UK PLC trading as Tesco Bank

Decision detail

Summary

Miss M complained that Tesco Bank failed to carry out thorough enough affordability checks before approving a credit card with a £2,050 limit in August 2022, when she was already struggling financially with £8,200 in external debt. Tesco relied on credit reference agency data, ONS statistics, internal modelling, and Miss M's declared income of £18,000 annually, concluding the lending was affordable. The ombudsman examined Miss M's actual bank statements and found her true monthly income was approximately £1,688 (from benefits and salary), higher than Tesco's estimate, and that even with this corrected figure and actual rent of £425, she had sufficient net disposable income of £390-450 monthly to afford the new credit card, particularly given the 0% balance transfer benefit on £1,700 of the limit. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while there are no set list of checks lenders must carry out, Tesco's checks using CRA data, ONS data, internal modelling, and declared information were reasonable and proportionate. Although Tesco could have obtained bank statements for better verification, the ombudsman concluded that even with actual bank statement evidence showing Miss M's true income of £1,688 monthly (higher than Tesco's estimate), the lending would still have been affordable. With actual income, existing debt costs of £289, essential living costs of £492, rent of £362-425, and new credit card cost of £87, Miss M would have had £390-450 monthly net disposable income remaining. The 0% balance transfer benefit further supported affordability.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website