Not upheld: irresponsible lending and unaffordable credit complaint against Vanquis Bank Limited

Decision detail

Summary

Mrs T complained that Vanquis irresponsibly lent to her by providing a credit card and increasing her limit five times between 2011 and 2016, when she was struggling financially and could only make minimum repayments. The ombudsman found that proportionate checks were completed at account opening and for the first two limit increases, given the modest amounts and Mrs T's significant overpayments. For the final three increases, while the ombudsman considered Vanquis could have done more given increased external debt, the absence of current account statements prevented a conclusion that the lending was unaffordable, and Mrs T's continued substantial overpayments suggested adequate disposable income. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the regulatory requirement for proportionate, borrower-focused affordability assessments. For the initial account opening and first two limit increases, the checks were proportionate given the modest amounts, Vanquis' lending model targeting imperfect credit histories, significant overpayments by Mrs T, and absence of adverse CRA information. For increases three and four, while Vanquis could have done more given increased external debt and time elapsed, without current account statements the ombudsman could not conclude Vanquis had sufficient information to know Mrs T was struggling. For increase five, despite increased external debt and time passed, Mrs T's significant overpayments (1445% of minimum) indicated disposable income, and again without current account statements, the ombudsman could not conclude the lending was unaffordable. The absence of evidence that Vanquis acted irresponsibly meant the complaint could not be upheld.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website