Not upheld: Irresponsible lending complaint against AMERICAN EXPRESS SERVICES EUROPE LIMITED

Decision detail

Summary

Mr W complained that Amex irresponsibly approved two credit cards: Card 1 in January 2020 with an £8,000 limit and Card 2 in April 2023 with a £6,300 limit. Mr W's circumstances subsequently deteriorated with significant income decline from investment losses, and his credit card debt increased from approximately £1,477 to £11,175 between the two applications. The ombudsman found that Amex conducted proportionate checks for both cards, verifying income and assessing affordability based on known circumstances at the time of application. Although Amex could not verify Card 2's declared income and used bureau modelled data, the ombudsman concluded that additional checks would have revealed sufficient income including an imminent pension payment and rental income. The complaint was not upheld as the ombudsman found fair lending decisions were made based on proportionate checks, and Mr W's subsequent income decline was unknown to Amex at the time of approval.

The Ombudsman's reasoning

The ombudsman applied FCA guidance on responsible lending, requiring proportionate checks based on credit limit, monthly repayments, borrowing history, and known circumstances. For Card 1, the ombudsman found Amex's checks proportionate given the £8,000 limit, Mr W's verified income of approximately £3,200 monthly, low existing credit utilisation, and no adverse credit data. For Card 2, although Amex could not verify the declared £50,000 income and used bureau modelled income of £38,400, the ombudsman found that even with additional checks, Amex would have discovered sufficient income (including the imminent £28,051 pension payment and rental income evidenced in bank statements) to support the £6,300 limit. The ombudsman noted Mr W's income decline occurred after the cards were approved and was unknown to Amex. The significant increase in credit card debt by 2023 was visible to Amex but not indicative of overindebtedness given the near-elimination of the mortgage and unsecured loan, and the absence of adverse credit data.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website