Partially upheld: irresponsible lending - disproportionate credit limit increase complaint against New Wave Capital (trading as Capital on Tap)
Financial Ombudsman decision DRN-6362456 of 2026-05-15T00:00:00+00:00. irresponsible lending - disproportionate credit limit increase complaint against New Wave Capital (trading as Capital on Tap). Outcome: Partially upheld.
Decision detail
| Reference | DRN-6362456 |
|---|---|
| Decision date | 2026-05-15T00:00:00+00:00 |
| Firm | New Wave Capital (trading as Capital on Tap) |
| Product | business credit facility (revolving credit) |
| Claim type | irresponsible lending - disproportionate credit limit increase |
| Outcome | Partially upheld |
| Remedy | New Wave Capital Limited must refund all fees, interest and charges applied to E's account in excess of the original £1,000 limit, putting E in the position it would have been in at the point the debt was sold to the third party had the additional interest, fees and charges not been applied. E remains liable for the capital borrowed up to the original £1,000 limit. |
Summary
E, a newly incorporated company with no trading history, obtained a £1,000 revolving credit facility from New Wave Capital in February 2025 based on projected turnover figures. In April 2025, New Wave increased the credit limit to £5,000 without request from the company's director, Mr J, notifying him via email with an option to decline. E entered arrears in July 2025, approximately 3 months after the limit increase, and the account was eventually sold to a third party in January 2026. The ombudsman upheld the complaint regarding the limit increase, finding it was not proportionate given E's lack of trading history and limited repayment record, and ordered New Wave to refund all fees, interest and charges applied in excess of the original £1,000 limit. The ombudsman rejected New Wave's arguments based on Mr J's personal credit profile, noting that E was the actual borrower and the assessment should have been proportionate to E's circumstances.
The Ombudsman's reasoning
The ombudsman found that while the initial £1,000 limit was reasonable based on proportionate checks, the increase to £5,000 within two months was not fair or proportionate. The ombudsman was not persuaded by New Wave's evidence regarding E's revenue because E was not incorporated until November 2024 and could not have generated revenue before that date. The ombudsman noted that New Wave's arguments focused on Mr J's personal circumstances rather than E's circumstances as the actual borrower. The fact that E entered arrears within 3 months of the increased limit being provided demonstrated the limit was neither affordable nor sustainable. The ombudsman found New Wave behaved reasonably in handling arrears and was not responsible for third-party debt collection actions after the debt was sold.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| New Wave Capital (trading as Capital on Tap), all decisions | 2 | 25% |
Source
Read the original decision on the Financial Ombudsman Service website