Not upheld: irresponsible lending and unaffordable credit complaint against MBNA Limited

Decision detail

Summary

Mr H complained that a credit card and subsequent credit limit increase provided by MBNA in 2017-2018 were unaffordable and caused him financial difficulty. MBNA rejected the complaint as being made too late. The ombudsman considered the complaint under section 140A of the Consumer Credit Act 1974 as relating to the overall fairness of the lending relationship. While finding that MBNA did not carry out proportionate checks before the limit increase, the ombudsman concluded that Mr H's income was sufficient to repay both credit limits within a reasonable periods, and that his later financial difficulties (from 2021) could not have been reasonably foreseen. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied section 140A of the Consumer Credit Act 1974, assessing whether the lending relationship was unfair to Mr H. For the initial credit card, the ombudsman found the £3,200.00 limit was affordable given Mr H's income and the 0% balance transfer offer which would reduce his overall interest payments. For the limit increase, while MBNA failed to request information about living costs (insufficient checks), the ombudsman concluded that even with such information, Mr H's income would have covered the £4,800.00 repayment within a reasonable period when committed expenditure was deducted. The ombudsman rejected Mr H's forensic analysis showing expenditure exceeded income as being based on bank statements MBNA was not required to obtain, and noted Mr H's later financial difficulties (from 2021) could not have been reasonably foreseen in March 2018.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website