Shop Direct Finance Company Limited · DRN-5975582

The complaint Ms B complains that Shop Direct Finance Company Limited (Shop Direct) lent to her irresponsibly when opening a catalogue shopping account and subsequently increasing her credit limit. Ms B says this made her relationship with Shop Direct unfair. What happened Ms B applied for and was granted a Shop Direct catalogue account. The credit limit was subsequently changed as shown below: Date Event Credit Limit October 2017 Account Opened £750 April 2018 Credit imit Increase £1,250 September 2018 Credit limit decrease £800 October 2018 Credit limit decrease £750 February 2019 Credit limit increase £800 March 2019 Credit limit decrease £150 December 2019 Credit limit increase £450 January 2021 Credit limit increase £550 December 2022 Credit limit increase £750 September 2024 Credit limit decrease £700 April 2025 Credit limit decrease £625 In summary, Ms B says her relationship with Shop Direct is unfair following them lending to her irresponsibly. She says Shop Direct made insufficient affordability checks before opening her account and increasing credit limits. Ms B says had proper checks been carried out, this would have shown she was already in significant financial difficulties and could not afford the additional lending. Ms B complained to Shop Direct in April 2025 who considered the matter, but didn’t uphold the complaint. In their Final Response Letter dated May 2025, Shop Direct said they conducted appropriate and proportionate checks that considered the information provided at application as well as external credit file data. They felt the lending had been fair. Ms B disagreed and brought the matter to this service in September 2025. An investigator considered the merits of the case and all the available evidence. Given the time since the account opening and jurisdictional limitations (which I will address briefly later), she considered the increases to Ms B’s account from December 2019 onwards. She also considered the overall fairness of the relationship dating back to the account opening. In her view, she found that Shop Direct should have made further checks in relation to the credit limit increases up to January 2021. However, given the length of time since these increases and the lack of documentation available from the parties, it was not possible to say the lending had been unfair. In relation to the credit limit increase in December 2022, the investigator said proportionate checks were not made and Shop Direct should have done more. However, if those checks had been made, they would have likely shown that the lending was affordable. Given this,

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she also found that the relationship with Shop Direct had not been unfair. Ms B disagreed and the case has come to me for a final decision. What I can and can’t decide The investigator has already explained the jurisdictional limitation in her view. I agree with her position and will summarise it here without repeating the full detail. Where a firm doesn't consent to us looking back further (as in this case), a consumer must raise their complaint within six years of the event complained about or, if later, within three years of becoming aware (or reasonably becoming aware) that they had cause for complaint. Shop Direct approved this catalogue account in October 2017 and the lending decisions made prior to 24 April 2019 happened more than six years before the complaint was raised on 24 April 2025. The limit increases from December 2019 onwards were within six years of the complaint being raised. So, those are the increases I am considering. But Ms B is also complaining about the fairness of her relationship with Shop Direct. As that relationship has continued to date, I can consider fairness dating back to the opening of the account. 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 considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. We’ve set out our approach to considering unaffordable and irresponsible lending complaints on our website – including the key relevant rules, guidance, good industry practice and law. In short, lenders must ensure that any credit that is approved is affordable and sustainable for the borrower. I’ve followed our approach when deciding Ms B’s complaint. Ms B has provided further detail in response to the investigators view and I have read and considered all of this in reaching my decision. Having done so, and recognising that it will disappoint Ms B, I agree with the investigator’s view. I will explain why and address the points most recently raised by Ms B. Account Opening and Increases up to January 2021 When Ms B opened the account in 2017, she told Shop Direct she lived at home with her parents and worked part time earning £8,000 per year. Shop Direct say they carried out a credit check which showed a very small amount of existing credit of £167. I agree with the investigator’s opinion that at this point (or at any event by the first increase in April 2018), Shop Direct should have done more to confirm Ms B’s outgoings. This could easily have been done by asking for some simple monthly costs for food, travel, housing etc. I don’t believe the checks performed were proportionate to the lending given the low part time income and the absence of any expenditure checks. Ms B says this should be enough for me to find in her favour. However, it is only the first of two tests I must apply in all cases of this kind. I will now consider the second, what would

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Shop Direct have likely found had they conducted reasonable and proportionate checks at that time. To recreate what checks might have found, the investigator has asked for current account statements covering the three months before the lending decision. However, due to the time elapsed since then, Ms B is unable to provide these. I note Ms B has supplied some verification of earnings at that time which I have seen. However, expenditure records are simply no longer available. This is not uncommon when considering complaints dating back several years. In the absence of that evidence, I am unable to determine what Shop Direct might have found and given that, like the investigator, I am unable to find that lending was unfair. Credit limit increase December 2022 In evidence provided by Shop Direct, they say that credit limit increases were offered on review following a period of satisfactory account management. This was supported by reference to Ms B’s credit file. But, I don’t think that was enough given that I have seen nothing to show that more detailed expenditure had been obtained before offering the increased credit limit. I would have expected Shop Direct to have found out more given the previous customer requests to reduce credit limits and more than one over credit limit in the months before the increase. For these reasons, I do not think the checks performed by Shop Direct were proportionate to the lending being offered. I would have expected some further high-level information about Ms B’s actual expenditure to have been obtained, Shop Direct could have done this in a number of ways, but to recreate what they would likely have found, I have relied on the current account records provided to the investigator by Ms B. This is because they are the best evidence available to me as to Ms B’s financial situation at that time. I must make it clear that I do not think Shop Direct needed to request sight of current account statements to make a lending decision, only that they should have asked more than they did. For this reason and in response to Ms B’s most recent comments, Shop Direct would never have seen her current account records and would not have been aware of any overdraft use at the time of the increase. Ms B also mentions a number of informal family loans to pay for significant life events. These would not have shown as lending on a credit report and as I have said Shop Direct didn’t need to look at current account records, they would not have been aware of this informal lending. I have seen nothing to suggest that this was voluntarily disclosed to Shop Direct. I have reviewed the calculations performed by the investigator based on Ms B’s declared income and performed my own. Having done this, I agree that the available disposable income in the months leading up to the increase is such that the lending was likely affordable and could be repaid sustainably. Given this, it follows that I believe the lending was fair when increasing the credit limit. In reaching my conclusions, I’ve also considered whether the lending relationship between Ms B and Shop Direct might have been unfair to Ms B under s140A of the Consumer Credit Act 1974 (“CCA”). However, for the reasons I’ve already explained, I’m satisfied that Shop Direct did not lend irresponsibly when providing Ms B with the shopping account or by increasing her credit limit. And I haven’t seen anything to suggest that s140A CCA would, given the facts of this complaint, lead to a different outcome here.

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My final decision My final decision is that I do not uphold Ms B’s complaint against Shop Direct Finance Company Limited. Under the rules of the Financial Ombudsman Service, I’m required to ask Ms B to accept or reject my decision before 26 March 2026. Richard Bellamy Ombudsman

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