Not upheld: irresponsible lending complaint against NewDay Ltd trading as Aqua

Decision detail

Summary

Miss E complained that NewDay lent to her irresponsibly when opening a credit card account and subsequently increasing her credit limit twice, arguing that proper checks would have revealed her financial difficulties. NewDay initially lent £450 in August 2024, increased the limit to £1,200 in November 2024, and to £2,700 in April 2025. The ombudsman found that the initial account opening checks were proportionate and reasonable, but the checks for the credit limit increases were not sufficiently rigorous as NewDay should have questioned the significant discrepancy between Miss E's declared income and the income shown by Current Account Turnover data. However, the ombudsman concluded that had reasonable and proportionate checks been conducted, they would most likely have shown the lending was affordable based on Miss E's actual financial position. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the regulatory requirement for proportionate checks that assess affordability and sustainable repayment without causing financial difficulty. For account opening, the checks were reasonable and proportionate given the modest credit limit and the information available. For the two credit limit increases, while the checks carried out were not sufficiently rigorous (NewDay should have questioned the significant discrepancy between declared and CATO-derived income), the ombudsman concluded that reasonable and proportionate checks would most likely have shown the lending was affordable based on Miss E's actual financial position as evidenced by her bank statements. The ombudsman also considered whether the lending relationship was unfair under Section 140A of the Consumer Credit Act 1974 but found no basis for such a finding.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website