NewDay Ltd · DRN-6174689

The complaint Miss M complains that NewDay Ltd trading as Aqua irresponsibly lent to her. What happened Miss M was approved for an Aqua credit card in July 2022, with a £600 credit limit. The credit limit was increased four times; in March 2023 (to £1,200), in August 2023 (to £1,950), in November 2023 (to £2,950), and in April 2024 (to £3,950). Miss M says Aqua irresponsibly lent to her. Miss M made a complaint to Aqua, who did not uphold her complaint. Aqua said that their affordability checks were appropriate and proportionate. Miss M brought her complaint to our service. Our investigator did not uphold Miss M’s complaint. He said that Aqua’s checks were proportionate, and they made fair lending decisions. Miss M asked for an ombudsman to review her complaint. She made a number of points. In summary, she told us a lot of information about her diagnosed mental health conditions, including when these lending decisions were made, which directly increased her vulnerability regarding the credit card use. She said she had also completed a Debt Management Plan (DMP). Miss M said that she did not have £2,000 in disposable income, and Aqua didn’t ask her any questions regarding her essential outgoings. Miss M said that by Aqua using modelling data instead of her actual expenditure resulted in a materially inaccurate affordability assessment. She said Aqua failed to verify her income or her expenditure. 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. Firstly, I’m aware that I’ve only summarised Miss M’s complaint points. And I’m not going to respond to every single point made by her. No discourtesy is intended by this. It simply reflects the informal nature of our service as a free alternative to the courts. If there’s something I haven’t mentioned, it isn’t because I’ve ignored it. I haven’t. I’m satisfied I don’t need to comment on every individual point to be able to reach what I think is a fair outcome. I’d like to thank Miss M for sharing with our service detailed information about her health. I won’t go into great detail in this decision regarding what Miss M has said about her health to protect her identity, however, I want to reassure her that I’ve read everything she’s told us about this. I have reviewed all of Aqua’s customer notes which start in August 2022, where Miss M contacts Aqua to update her mobile number, but there is no notes about Miss M’s health conditions until she told them about these in 2025 – the following year after the last lending decision. So I can’t fairly say that Aqua would have known about Miss M’s health conditions prior to her letting them know about them. Before agreeing to approve or increase the credit available to Miss M, Aqua 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

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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 Aqua have done and whether I’m persuaded these checks were proportionate. Acceptance for the Aqua credit card I’ve looked at what checks Aqua said they did when initially approving Miss M’s application. I’ll address the credit limit increases later on. Aqua said they looked at information provided by Credit Reference Agencies (CRA’s) and information that Miss M had provided before approving her application. The information shows that Miss M had declared a gross annual income of £26,000. She had an unsecured active debt to declared gross annual income ratio of 1.2%, which would have equated to her having around £312 of active unsecured debt. Miss M also had no public records – such as a County Court Judgement (CCJ) showing on her credit file. But a default had been registered 69 months prior to the checks. It may help to explain here that, while information like a default on someone’s credit file may often mean they’re not granted further credit – they don’t automatically mean that a lender won’t offer borrowing. So I’ve looked at what Aqua’s other checks showed to see if they made a fair lending decision here. Miss M had no accounts in arrears at the time the application was approved, or for the six months leading up to this. There was no evidence of a DMP showing on the information the CRA gave Aqua, so Aqua would not have been aware of the previous DMP Miss M was part of. The £600 credit limit was around 2.3% of her declared gross annual income. Aqua completed an affordability assessment using information that Miss M had given them, information from a CRA, regarding her monthly credit commitments, and modelling to estimate Miss M’s outgoings. Although Miss M has said that Aqua didn’t verify her actual outgoings, modelling is an industry standard way of estimating a borrower’s outgoings. Aqua are not required to verify outgoings for each lending decision they make, as this would not be proportionate. As Miss M had a low debt to income ratio, no recent adverse credit information, and the new credit limit was only 2.3% of her declared gross annual income, then I’m not persuaded that it would have been proportionate for Aqua to have requested a bank statement to have verified Miss M’s income and expenditure. So I’m satisfied that the checks Aqua carried out here, prior to approving the initial £600 credit limit were proportionate and that Aqua made a fair lending decision to approve Miss M’s application for the Aqua account. March 2023 credit limit increase - £600 to £1,200 A CRA reported that Miss M’s active unsecured debt was £173 at the time of the checks, which was lower than what it was at the last lending checks. Miss M had been in arrears on none of her external accounts since her account had been opened. Aqua would have also been able to see how Miss M operated her account since the account opening checks. Miss M incurred two late fees, which could be a sign of financial difficulty. But here, they appear to be oversights. I say this as in the months that Miss M incurred the fee, she made repayments which were for 10 times her minimum repayment, and for nearly double her requested minimum repayment. So I wouldn’t expect Miss M would be able to

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pay more than her minimum repayment if she was financially struggling here. Miss M often made higher repayments than what she was required to make, which could suggest she had the affordability to sustainably make repayments for a higher credit limit, and she didn’t exceed her credit limit. So I’m persuaded that Aqua’s checks were proportionate here, and they made a fair lending decision to increase the credit limit on the account. August 2023 credit limit increase - £1,200 to £1,950 A CRA reported that Miss M’s active unsecured debt was £1,552 at the time of the checks, which was higher than what it was at the last lending checks. But this was less than 6% of her originally declared gross annual income. Miss M had been in arrears on none of her external accounts since the last lending decision. Aqua would have also been able to see how Miss M operated her account since the last lending decision. Miss M again incurred two late fees, which could be a sign of financial difficulty. But again, they appear to be oversights. I say this as in the months that Miss M incurred the fee, she made repayments which were for over three times her minimum repayment, and for over four times her requested minimum repayment. So I wouldn’t expect Miss M would be able to pay more than her minimum repayment if she was financially struggling here. Miss M often made higher repayments than what she was required to make, which could suggest she had the affordability to sustainably make repayments for a higher credit limit, and she didn’t exceed her credit limit. While Miss M may have used a money transfer since her credit had last been increased, this is a legitimate use of the account, so I can’t fairly say that this should have prompted further checks. While Aqua completed an affordability assessment as part of this lending decision, I’m mindful that they used Current Account Turnover (CATO), to estimate Miss M’s income. While CATO is an industry standard way of assessing income, when the CATO is more than double the income that Miss M declared, then I’m not persuaded that using CATO here would be appropriate, albeit I accept that Miss M could have had a pay rise/promotion/job change etc since she opened the account. But here, it would have been more proportionate for Aqua to have used the original net monthly income, which was in line with what Miss M declared, as I don’t doubt what Miss M has told us about not having over £2,000 of disposable income. But on the outgoings modelled here, and based on the higher payments Miss M was making to her account, I’m not persuaded that further checks would have been proportionate here such as requesting her bank statements. So I’m persuaded that Aqua’s checks were proportionate here, and they made a fair lending decision to increase the credit limit on the account. November 2023 credit limit increase - £1,950 to £2,950 A CRA reported that Miss M’s active unsecured debt was £2,847 at the time of the checks, which was higher than what it was at the last lending checks. But this was less than 11% of her originally declared gross annual income. Miss M had been in arrears on none of her external accounts since the last lending decision. Aqua would have also been able to see how Miss M operated her account since the last

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lending decision. Miss M incurred one late fee, but again she made a repayment in the same month, therefore I’m not persuaded that this should have resulted in further checks. At times Miss M often made higher repayments than what she was required to make, which could suggest she had the affordability to sustainably make repayments for a higher credit limit, and she didn’t exceed her credit limit. While Miss M may have again used money transfers since her credit limit had last been increased, this is a legitimate use of the account, so I can’t fairly say that this should have prompted further checks either. Similar to the last section, it would have been more proportionate for Aqua to have used the original net monthly income, which was in line with what Miss M declared, as I don’t doubt what Miss M has told us about not having over £2,000 of disposable income. But on the outgoings modelled here and how Miss M managed her external accounts, and this account, I’m not persuaded that further checks would have been proportionate here such as requesting her bank statements. So I’m persuaded that Aqua’s checks were proportionate here, and they made a fair lending decision to increase the credit limit on the account. April 2024 credit limit increase - £2,950 to £3,950 A CRA reported that Miss M’s active unsecured debt was £4,630 at the time of the checks, which was a lot higher than what it was at the last lending decision. The CRA Aqua used reported that Miss M had been in arrears on at least one account on two occasions since the last credit limit increase. Miss M incurred two late fees on the account since the last lending decision. Whereas previously Miss M had been making higher repayments than her minimum repayment, she hadn’t made much higher repayments since the last lending decision. So based on Miss M’s arrears on external accounts, her increase in debt being reported by one of the CRA’s that Aqua used, and how she managed her Aqua account since the last lending decision, then I’m persuaded that Aqua should’ve completed further checks to ensure the lending would be sustainable and affordable for her. There’s no set way of how Aqua should have made further proportionate checks. One of the things they could have done was to contact Miss M to enquire why she had been in arrears more than once on an external account. 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. I asked Miss M if she could provide us with her bank statements leading up to this lending decision to see if the lending would be affordable and sustainable for her. But Miss M did not provide me with the bank statements by the deadline given, even though she was sent a reminder. So on the face of it, it does look like Aqua should’ve looked more closely into this. But as my role is impartial, that means I have to be fair to both sides and although I’m satisfied that Aqua should’ve done more checks here – I can’t say whether further checks would’ve revealed further information which means they wouldn’t have lent. So as Miss M hasn’t provided me with the information she was asked for, that means that it wouldn’t be fair for me to say that Aqua shouldn’t have lent here, because I don’t know what further checks would reveal. I’ve also considered whether the relationship might have been unfair under s.140A of the Consumer Credit Act 1974. However, for the reasons I’ve already given, I can’t conclude that

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Aqua lent irresponsibly to Miss M 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 I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss M to accept or reject my decision before 28 April 2026. Gregory Sloanes Ombudsman

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