Partially upheld: Irresponsible lending complaint against NewDay Ltd trading as Debenhams

Decision detail

Summary

Miss A complained that NewDay lent to her irresponsibly by increasing her credit card limit six times between 2017 and 2021, ultimately reaching £5,750, when she was making only minimum payments and had high external credit. NewDay initially defended all decisions but later conceded CLI6 was inappropriate. The ombudsman found that while NewDay failed to conduct adequate income and expenditure checks for CLI4 and CLI5, the available evidence showed Miss A had sufficient disposable income to afford these increases, making the lending decisions fair. The complaint was partially upheld only regarding CLI6, with NewDay ordered to refund interest, fees and charges on balances above £4,700 from December 2021 onwards.

The Ombudsman's reasoning

The ombudsman found that while NewDay carried out reasonable checks including monthly credit file reviews and affordability tools, it failed to obtain updated income and expenditure information for CLI4 and CLI5 despite these being significant increases (each £1,200) when Miss A already had substantial external credit (£19,625 and £18,642 respectively). However, when the ombudsman reviewed Miss A's bank statements, they showed sufficient disposable income (approximately £500 for CLI4 and £800 for CLI5) to sustain the increases. Therefore, had NewDay conducted proper checks, it would have reached the same fair lending decision. CLI6 was acknowledged by NewDay itself as inappropriate and was not defended. The ombudsman found no other unfair treatment and noted that Miss A herself stated her financial position at the time allowed the increases.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website