Upheld: Irresponsible lending complaint against Vanquis Bank Limited

Decision detail

Summary

Ms M complained that Vanquis provided credit irresponsibly by issuing a credit card in April 2011 and subsequently increasing its limit six times without proper affordability assessments. The card had an initial limit of £250, increased to £4,250 by July 2021, with an APR of 39%. Between April 2011 and January 2012, Ms M incurred multiple adverse entries including over limit charges, cash advance fees, and late payment fees, with warning signs appearing within one month of card issuance. The ombudsman found that while the initial card issuance was reasonable, the first credit limit increase in February 2012 was unfair due to clear indicators of financial difficulties and lack of evidenced income and expenditure assessments. Consequently, all subsequent credit limit increases should not have been granted. Vanquis was ordered to rework the account removing all interest, fees and charges from February 2012 onwards, refund any credit balance with interest, arrange an affordable repayment plan for remaining balances, remove adverse credit information, and pay £450 compensation.

The Ombudsman's reasoning

The ombudsman found that while the initial card issuance in April 2011 was reasonable given the modest credit amount and available information, the first credit limit increase in February 2012 was unfair. The frequency of over limit fees, cash advances, and late payment fees occurring within one month of card issuance, coupled with the lack of any evidenced income and expenditure assessment, indicated Ms M was in financial difficulties. These warning signs should have prevented any credit limit increases. Consequently, all subsequent credit limit increases (CLI 2-6) should not have been granted either.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website