Not upheld: Irresponsible lending complaint against Vanquis Bank Limited

Decision detail

Summary

Mr R complained that Vanquis Bank lent to him irresponsibly by issuing a credit card in August 2014 with an initial £500 limit and subsequently increasing it to £3,500 without adequate affordability checks or income verification. Mr R argued that Vanquis should have checked his bank statements, which would have revealed very low personal income despite his declared household income of £62,000. The ombudsman found that the initial checks were reasonable and proportionate given the modest credit amount and clean credit history, and that for subsequent increases, while Vanquis could not confirm whether affordability assessments were carried out, there was insufficient evidence to conclude irresponsibility without bank statements from those periods. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the regulatory requirement for reasonable and proportionate affordability checks that are borrower-focused. For the initial £500 credit limit, the ombudsman found the checks proportionate given the modest credit amount and absence of adverse credit markers, concluding income verification was not necessary. For subsequent credit limit increases, while acknowledging Vanquis could not confirm whether affordability assessments were carried out, the ombudsman found it would be unfair to automatically conclude irresponsibility without evidence of what reasonable checks would have shown. Since Mr R could not provide bank statements for the relevant periods, the ombudsman could not fairly conclude he lacked sufficient disposable income. The ombudsman rejected arguments based on high credit utilisation alone and noted that mental health difficulties were only disclosed after lending decisions were made.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website