Clydesdale Bank Plc · DRN-6235598

The complaint Miss C complains that Clydesdale Bank Plc trading as Virgin Money irresponsibly lent to her. What happened Miss C was approved for a Virgin Money credit card with a £4,200 credit limit in June 2023. Miss C says this was irresponsibly lent to her. Miss C made a complaint to Virgin Money, who did not uphold her complaint. Virgin Money said that an appropriate and an affordable credit limit was assigned. Miss C brought her complaint to our service. Our investigator upheld Miss C’s complaint. He said that Virgin Money should have completed further checks, and further checks would have shown the lending was unaffordable for Miss C. Virgin Money asked for an ombudsman to review the complaint. They said that there was no information to suggest Miss C was in financial difficulties, or had any affordability issues, which supports how she managed the account and how she benefitted from a promotional interest rate. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Before agreeing to approve the credit available to Miss C, Virgin Money needed to make proportionate checks to determine whether the credit was affordable and sustainable for her. There’s no prescribed list of checks a lender should make. But the kind of things I expect lenders to consider include - but are not limited to: the type and amount of credit, the borrower's income and credit history, the amount and frequency of repayments, as well as the consumer's personal circumstances. I’ve listed below what checks Virgin Money have done and whether I’m persuaded these checks were proportionate. The information showed that Miss C had no County Court Judgements (CCJ’s) or defaults being reported by the Credit Reference Agency (CRA), and no accounts in arrears at the time of the checks. Miss C declared a gross annual income of £24,336. The CRA informed Virgin Money that Miss C had unsecured debt of £14,885 which £12,604 was for revolving debt (such as any credit cards/store cards/overdrafts she had). Virgin Money completed an affordability assessment for Miss C. But Miss C was showing as having a financial associate, so Virgin Money completed a household affordability assessment to see if Miss C would be able to afford repayments for the £4,200 credit limit. I’m persuaded that it was fair for Virgin Money to expect Miss C wouldn’t pay all of the household outgoings, and this is why it would be fair to consider what her financial associate would be paying also towards the outgoings. While her financial associate wouldn’t be responsible for paying any of the repayments on the account, it wouldn’t be fair to include outgoings that Miss C wouldn’t be paying towards the household expenditure either.

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But I do think it would have been proportionate for Virgin Money to have completed further checks here. I say this because Miss C had a debt to gross annual income ratio of 61.2%. And if Miss C used the full credit limit Virgin Money approved for her then this could have grown to 78.4% debt to declared gross annual income (although I do note that Miss C intended to complete balance transfers totalling £3,100, so although the debt to income would have grown, it mightn’t have grown as much). The £4,200 credit limit was 17.3% of Miss C’s declared gross annual income. Virgin Money have not recorded a split of who’s debt costs how much each month. As I’ve previously said Miss C’s financial associate would not be responsible for paying for Miss C’s debt, and vice versa. So based on the debt to income ratio, Virgin Money not knowing the split of outgoings between Miss C and her financial associate’s debt, then I’m persuaded that Virgin Money should have completed further checks here. There’s no set way of how Virgin Money should have made further proportionate checks. One of the things they could have done was to contact Miss C to ask her how the bills were split, and to ensure she could make sustainable and affordable repayments for the credit limit provided. Or they could have asked for her bank statements as part of a proportionate check to ensure the lending was sustainable and affordable for her. Miss C has provided her bank statements leading up to this lending decision. I can see that her income fluctuates. At the lowest it was £1,600.74, which appears to be lower than Virgin Money calculated for her. And while Miss C would benefit from a promotional interest rate, so she may save some interest for a set period of time, I need to be mindful that the repayments need to be affordable and sustainable for her. Based on the bank statements, I’m not persuaded that Miss C could reasonably sustain affordable repayments for a £4,200 credit limit, so I’m not persuaded that Virgin Money made a fair lending decision here. While Virgin Money have said the conduct of the account supports the lending was affordable, they would not know how Miss C would manage her account prior to it being opened. So if Virgin Money would have made further checks, such as asking her for her regular income and outgoings, or viewing her bank statements, it would have been clear to them that Miss C would not be able to make sustainable and affordable repayments, so I’m not persuaded that Virgin Money made a fair lending decision here. I’ve also considered whether the relationship might have been unfair under s.140A of the Consumer Credit Act 1974. However, I’m satisfied the redress I have directed at the end of this decision results in fair compensation for Miss C in the circumstances of her complaint. I’m satisfied, based on what I’ve seen, that no additional award would be appropriate in this case. Putting things right Our investigator has suggested that Virgin Money takes the actions detailed below, which I think is reasonable in the circumstances. In addition to this, if Virgin Money do not own the debt anymore for the account, then they should also transfer any debt back to themselves if it has been passed to a debt recovery agent or liaise with them to ensure the redress set out below is carried out promptly.

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My final decision I uphold this complaint. Clydesdale Bank Plc trading as Virgin Money should take the following actions: Virgin Money should arrange to transfer any debt back to themselves if it has been passed to a debt recovery agent or liaise with them to ensure the redress set out below is carried out promptly; Rework the account removing all interest, fees, charges, and insurances (not already refunded) that have been applied; If the rework results in a credit balance, this should be refunded to Miss C along with time weighted Bank of England base rate plus 1% simple interest per year* calculated from the date of each overpayment to the date of settlement. Virgin Money should also remove all adverse information regarding this account from Miss C’s credit file; Or, if after the rework there is still an outstanding balance, Virgin Money should arrange an affordable repayment plan with Miss C for the remaining amount. Once Miss C has cleared the balance, any adverse information in relation to the account should be removed from Miss C’s credit file. *If Virgin Money considers that they are required by HM Revenue & Customs to deduct income tax from that interest, they should tell Miss C how much they’ve taken off. They should also give Miss C a tax deduction certificate if she asks for one, so she can reclaim the tax from HM Revenue & Customs if appropriate. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss C to accept or reject my decision before 17 April 2026. Gregory Sloanes Ombudsman

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