Not upheld: Irresponsible lending complaint against NewDay Ltd

Decision detail

Summary

Miss C complained that NewDay irresponsibly lent to her by approving a credit card in January 2022 and subsequently increasing her credit limit six times to £8,000 by July 2024, without proper affordability assessments. She argued she could not afford the growing balance and relied on the card for daily living expenses due to high repayments on other credit. The ombudsman found that NewDay's initial affordability assessment was reasonable, with Miss C appearing to have sufficient disposable income and no adverse credit indicators. While the checks for the May and August 2023 increases lacked full proportionality, review of Miss C's bank statements confirmed she had adequate disposable income to sustainably afford the repayments. The 2024 increases were not utilised, causing no detriment. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that NewDay's affordability assessments were reasonable and proportionate at account opening and for most credit limit increases. At opening, the balance transfer was viewed as an attempt to reduce indebtedness, Miss C had no adverse credit information, and she appeared to have sufficient disposable income. For the May and October 2022 increases, Miss C was managing the account well with no adverse indicators. For the May and August 2023 increases, while the checks were not fully proportionate due to lack of income re-validation, the ombudsman's review of Miss C's bank statements showed she had sufficient disposable income to afford the repayments sustainably. For the 2024 increases, the credit limits were not utilised, so no detriment occurred. The ombudsman concluded that even with more thorough checks, NewDay's lending decisions would have been the same based on the actual affordability position.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website