Partially upheld: irresponsible lending - credit limit increase complaint against NewDay Ltd trading as Aqua

Decision detail

Summary

Miss W complained about a credit card and subsequent credit limit increase provided by Aqua. The initial £1,200 credit limit approved in November 2021 was upheld as fair based on proportionate checks showing declared income of £15,000 and no adverse credit information. However, the April 2023 increase to £2,000 was upheld as irresponsible, as further checks would have revealed Miss W was a student with no actual income. The ombudsman rejected claims that Aqua should have identified Miss W's vulnerability and health difficulties, finding no specific indicators available to Aqua and that vulnerability guidance was best practice rather than mandatory rules. The debt sale to a third party was permitted under the credit agreement. Aqua must refund interest, fees, and charges on amounts above £1,200 from April 2023 onwards, with any remaining balance subject to an affordable repayment plan.

The Ombudsman's reasoning

The initial £1,200 credit limit was fair as Aqua conducted proportionate checks appropriate to the credit amount, verified income of £15,000 annually, and found no adverse credit information. However, the April 2023 increase to £2,000 required further checks which would have revealed Miss W was a student with no actual income, making the increase irresponsible. The ombudsman rejected claims that Aqua should have identified vulnerability without being told, as the guidance on vulnerable customers was best practice rather than mandatory rules, and there were no specific indicators of health-related vulnerability. The debt sale was permitted under the credit agreement terms. While sympathetic to Miss W's mental health difficulties, the ombudsman found insufficient causal link to Aqua's actions alone and declined to award compensation for treatment costs.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website