Not upheld: irresponsible lending and unaffordable credit complaint against Barclays Bank UK PLC (trading as Tesco Bank)

Decision detail

Summary

Mr L complained that Tesco Bank irresponsibly provided him with a credit card in December 2017 with a £950 limit, which he claimed was unaffordable and caused ongoing financial difficulty culminating in default. Tesco Bank initially rejected the complaint as out of time. The ombudsman considered the complaint under section 140A of the Consumer Credit Act 1974 as relating to the fairness of the lending relationship. The ombudsman found that Tesco Bank's checks were proportionate given the low credit limit, absence of adverse credit information, and reasonable income information obtained. The ombudsman also found that Tesco Bank appropriately reduced the credit limit to £825 in October 2021 when it identified changed circumstances. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied section 140A of the Consumer Credit Act 1974 to assess whether the lending relationship was unfair. The ombudsman found that Tesco Bank's checks were proportionate given the low credit limit of £950, the lack of adverse credit information, and the fact that statistical data could reasonably be used for expenditure estimates. The credit limit reduction in October 2021 demonstrated appropriate action by Tesco Bank, and there was no obligation to terminate the account at that point. The ombudsman concluded that the information available in December 2017 indicated Mr L could repay the credit within a reasonable period.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website