Not upheld: Irresponsible lending complaint against MBNA Limited

Decision detail

Summary

Mr W complained that MBNA lent irresponsibly by failing to make sufficient affordability checks before issuing a credit card with an £8,000 limit and subsequently increasing it to £13,000. MBNA relied on application data, credit file review, and ONS models without verifying Mr W's declared £40,000 annual income. The ombudsman found the checks were not reasonable and proportionate due to lack of income verification, but concluded that proper verification using three months of current account records would have confirmed the declared income and shown sufficient disposable income (approximately £1,400 monthly) to sustain repayments. Since Mr W's balance never exceeded £4,000, he suffered no detriment from the credit limit increase. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman agreed that MBNA's checks were not reasonable and proportionate because they failed to verify Mr W's income. However, when reasonable checks were replicated using the three months of current account records available, they would have shown income consistent with declarations and sufficient disposable income to sustain repayments. The ombudsman calculated that repayments on £8,000 over four years would be sustainably repayable based on the financial position revealed. For the credit limit increase, no detriment occurred as Mr W's balance never exceeded the original limit.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website