Not upheld: irresponsible lending / unaffordable credit complaint against Tesco Bank (trading name of Barclays Bank UK PLC)

Decision detail

Summary

Mr B complained that Tesco Bank irresponsibly lent him a £5,000 credit card in November 2021 when he was already struggling with existing debt repayment. Tesco Bank had obtained information on Mr B's income (£24,500 annually) and conducted a credit search showing existing debt of £15,600 and three recent cash withdrawals from other cards. The ombudsman found that Tesco Bank's checks were proportionate, noting that Mr B had no history of payment difficulties, lived at home with parents (reducing living costs), and the card offered a 0% balance transfer rate that would reduce his overall interest costs. The complaint was not upheld and no award was made.

The Ombudsman's reasoning

The ombudsman found that Tesco Bank's checks were proportionate for the early stage of the lending relationship. The credit limit of £5,000 did not require especially large monthly payments to clear within a reasonable period. While Mr B had existing debt and made cash withdrawals, these alone did not indicate financial difficulties in the absence of other warning signs such as defaults or missed payments. The 0% balance transfer offer meant Mr B could reduce his interest costs on existing debt. Tesco Bank's use of ONS statistical data for living costs was reasonable given what it knew about Mr B, particularly that he lived at home with parents and therefore had lower housing costs than assumed in the standard calculation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website