Clydesdale Bank Plc trading as Virgin Money · DRN-6098740

The complaint Mrs F complains that Clydesdale Bank Plc trading as Virgin Money lent to her irresponsibly. What happened Mrs F has the following credit cards with Virgin Money: Card Date Event Credit limit Closure date Card 1 29 November 2018 Account opening £9,300 30 September 2022 Card 2 25 May 2022 Account opening £10,000 21 September 2024 Mrs F also had another card with Virgin Money, but that was closed in June 2018. Our investigator has already explained that we cannot consider a complaint about that card, and Mrs F has accepted that. On 19 May 2025, Mrs F complained to Virgin Money. She said that when Card 1 was agreed she already had substantial debts and couldn’t afford another. And Virgin Money knew when it granted Card 2 about her existing borrowing and repayment history. She says it increased her credit limits while she was in persistent debt. To resolve her complaint, Mrs F asked for a refund of the charges and interest she’s paid and for any adverse information placed on her credit file to be removed. She also asked for compensation for the distress and inconvenience caused. Virgin Money looked into Mrs F’s complaint and issued a final response letter. It said it had considered the information she provided in her applications and had taken into account information from the credit reference agencies when reaching its lending decisions. Virgin Money didn’t uphold the complaint. Mrs F didn’t accept Virgin Money’s response, so she referred her complaint to our service. One of our investigators looked into it. He felt the complaint could reasonably be considered as being about an unfair lending relationship as described in Section 140A of the Consumer Credit Act 1974 (s.140) and explained that to each party. He went on to investigate the complaint. He felt the checks Virgin Money had carried out were reasonable and proportionate and that it had reached a fair decision to lend. He didn’t uphold the complaint. Mrs F didn’t agree with our investigator so the complaint has been passed to me to decide. 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. I’ve read and considered the whole file, but I’ll concentrate my comments on what I think is relevant. If I don’t comment on any specific point, it’s not because I’ve failed to take it on board and think about it but because I don’t think I need to comment on it in order to reach what I think is a fair outcome. This isn’t intended as a discourtesy to either party, but merely to reflect the informal nature of my role.

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There are time limits for referring a complaint to the Financial Ombudsman Service. Our investigator explained he felt the complaint about Card 1 had been brought to us too late. He explained why he didn’t, as a starting point, think we could look at a complaint about the lending decision that happened more than six years before the complaint was made. But he also explained why it was reasonable to interpret the complaint as being about an unfair relationship as described in s.140, and why this complaint about an allegedly unfair lending relationship had been referred to us in time. For the avoidance of doubt, I agree with our investigator that I have the power to look at the complaint on this basis. I think this complaint can reasonably be considered as being about an unfair relationship as Mrs F says the credit cards simply made her situation worse. These may have made the relationship unfair as she had to pay more in interest than she could afford and was unable to reduce the debt. Virgin Money hasn’t objected to us considering the complaint on this basis, so I don’t intend to comment on this further. Given what Mrs F has complained about, I need to consider whether Virgin Money’s decision to lend to her, or its later actions, created unfairness in the relationship between the two such that it ought to have acted to put right the unfairness – and if so whether it did enough to remove that unfairness. Mrs F’s relationship with Virgin Money is therefore likely to be unfair if it didn’t carry out proportionate affordability checks and doing so would have revealed its lending to be irresponsible or unaffordable, and if it didn’t then remove the unfairness this created somehow. I think there are key questions I need to consider in order to decide what is fair and reasonable in the circumstances of this complaint: • Did Virgin Money carry out reasonable and proportionate checks to satisfy itself that Mrs F was in a position to sustainably repay the credit? • If not, what would reasonable and proportionate checks have shown at the time? • Did Virgin Money make a fair lending decision? • Did Virgin Money act unfairly or unreasonably towards Mrs F in some other way? Virgin Money had to carry out reasonable and proportionate checks to satisfy itself that Mrs F would be able to repay the credit sustainably. It’s not about Virgin Money assessing the likelihood of it being repaid, but it had to consider the impact of the repayments on her. There is no set list of checks that it had to do, but it could take into account several different things such as the amount and length of the credit, the amount of the monthly repayments and the overall circumstances of the borrower. Card 1 When she applied for Card 1, Mrs F declared she was employed full time and earned £31,000 per year (around £1,900 per month), and had housing costs of £489 per month. She declared her partner’s income of £22,000 per year, bringing the household income to £53,000 (around £3,500 per month). She requested a balance transfer of £9,100 to take advantage of a reduced interest rate offer. Virgin Money verified her income using a widely used tool provided by the credit reference agencies and went on to check her credit file. It saw she had ‘revolving’ debt (credit, store cards and the like) of £9,099 – in line with the balance transfer requested – and ‘non-

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revolving’ debt (loans, hire purchase etc.) of £7,297. The check showed repayments to these facilities as being £320 per month (excluding the payments for the balance transfer) and all were up to date. She had no defaults, County Court Judgments (CCJ) or late payments. Virgin Money estimated her essential household expenditure as being £1,280 which, together with her housing cost of £489 and payment to her continuing credit facilities of £320, gave a total of £2,090 per month. This left a household disposable income of £1,430. Mrs F has said Virgin Money shouldn’t have based its decision on household income. But the rules lenders must follow when carrying out a creditworthiness assessment are set out in the Consumer Credit sourcebook (CONC). CONC 5.2A.12(2)(b) says lenders may consider a customer’s ability to repay an agreement using “income received by the customer jointly with another person or income received by another person in so far as it is reasonable to expect such income to be available to the customer to make repayments under the agreement”. As Mrs F declared a household income as part of her application, I don’t think it was wrong for Virgin Money to consider it. Virgin Money was satisfied with what it saw and agreed the account with a credit limit of £9,300 – sufficient to cover the balance transfer requested and the fee involved. I think based on the information Mrs F provided and that which Virgin Money found itself, I think the check carried out was reasonable and proportionate. I think it reached a fair decision to lend. Card 2 Mrs F repaid the balance of Card 1 in full by her April 2022 statement. She applied for Card 2 in May 2022. She had changed her employer and now declared an annual income of £53,000 (around £3,500 per month) and a household income of £83,000 (around £5,300 per month). Her housing costs had increased to £1,100. She requested a balance transfer of £7,522 – again it seems, to take advantage of a reduced interest rate. Virgin Money followed a similar process to Card 1. It verified her income using an online tool and went on to conduct a review of her credit file. Her revolving debt had fallen to £7,876 and her non-revolving debt had increased slightly to £9,968. Repayments to these facilities were now £560, and were all up to date. Virgin Money estimated her essential expenditure as being £2,800, leaving a household disposable income of around £2,500. So again, Virgin Money was satisfied with what it saw and was content to open the account. Perhaps in view of the improvement in the disposable income and the fact that her previous card had been run well and had been paid in full, it agreed a credit limit of £10,000. I think in view of the information it was given, and it found itself, the check carried out was reasonable and proportionate and it reached a fair decision to lend. Did Virgin Money act unfairly or unreasonably towards Mrs F in some other way? Mrs F has said she was in persistent debt at the time of each card and it was against regulations to increase credit limits for people in persistent debt. Virgin Money didn’t increase Mrs F’s credit limits, so I’ve taken her comments to mean that by giving her the cards, it increased her available credit limit. The rules around persistent debt on credit cards are set out in CONC 6.7.27-40. It sets various milestones and interventions expected from lenders. Persistent debt is defined as when the debtor (Mrs F) has paid to the creditor (Virgin Money) more in interest and charges than they’ve paid off the amount borrowed over the previous 18 months.

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Mrs F didn’t have a credit card with Virgin Money when she applied for Card 1, so she can’t have been in persistent debt with it at the time. And when she applied for Card 2, over the preceding 18 months she’d made payments totalling £29,490 of which approximately £1,270 had been interest charges to Card 1 and the balance had reduced to zero. It follows that she’d paid more in capital than interest and Card 1 didn’t meet the definition of persistent debt. And on Card 2 in the first 18 months, Mrs F paid £2,373 to the account, of which £635.84 was interest. While throughout the life of the account she generally made the minimum payment, this was usually around three times the interest payable. So I can’t see that she met the definition of persistent debt on this card either. This is not to minimise any financial difficulties she may have been facing, but I can’t reasonably conclude that Virgin Money ought to have considered her as being in persistent debt. I’ve not seen anything in the information provided by either party which suggests that Mrs F contacted Virgin Money at any stage to say she was struggling with the repayments or her finances in general. I don’t think it has treated her unfairly in some other way. Both Mrs F’s accounts with Virgin Money were repaid in full and closed some time ago. If Mrs F feels she is in financial difficulty, I’d encourage her to talk to her current creditors who have an obligation to treat consumers in difficulty fairly. For the reasons I’ve already given, I don’t think Virgin Money lent irresponsibly to Mrs F or otherwise treated her unfairly in relation to this matter. I haven’t seen anything to suggest that Section 140A would, given the facts of this complaint, lead to a different outcome here. My final decision My final decision is that I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs F to accept or reject my decision before 27 April 2026. Richard Hale Ombudsman

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