Not upheld: irresponsible lending - affordability of credit card complaint against Barclays Bank UK PLC (trading as Tesco Bank)

Decision detail

Summary

Mrs B complained that Tesco Bank irresponsibly lent to her by providing a £4,300 credit card in April 2023 when she could not afford it due to existing debts. Tesco Bank had obtained information on Mrs B's income (approximately £31,000 annually) and conducted credit searches showing no recent repayment difficulties, though she did have existing credit card debts. The ombudsman found that the bank's proportionate checks were reasonable for the early stage of a lending relationship and that Mrs B's income was sufficient to support repayment within a reasonable period. The ombudsman concluded that the credit card was affordable and that Tesco Bank had not acted irresponsibly, so the complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the FOS approach to irresponsible lending, requiring proportionate checks appropriate to the circumstances. For a revolving credit facility at the early stage of a lending relationship with a £4,300 limit, less thorough checks were reasonable. Mrs B's income of £31,000 was sufficient to support repayment within a reasonable period, her existing debts were not excessive relative to income, and the 0% balance transfer offer meant she would pay less interest and make larger inroads into her balance. The ombudsman concluded that even if more extensive checks had been conducted, they would not have led to a different lending decision.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website