Mis-Sold Credit, Catalogue & Store Cards

Jump to: Introduction | Do I Have a Claim? | How Do I Claim?

Introduction

Industry Insight

Have you had a Credit, Catalogue or Store Card where your credit limit was too high? So high that the monthly repayments were hard to manage, and you got into more debt?

Many people were originally given a manageable card limit, but the lender increased their limit without necessarily performing the correct checks, which in turn made the card unaffordable.

This is what the FCA said when they investigated a market study of Credit Cards:

“…around 650,000 cardholders have been in persistent debt for at least three consecutive years and a further 750,000 cardholders have been making systematic minimum repayments for at least three consecutive years. As credit card firms note, credit cards are suited to short term borrowing and can be an expensive way to borrow large amounts over a long period. We are concerned about the volume of borrowing behaviour that does not fit this pattern.”

[1] Read the full report here

Here is an Ombudsman’s decision on a Credit Card case upholding the complaint: www.financial-ombudsman.org.uk/decision/DRN-4721834.pdf

Do I Have a Claim?

Claiming Compensation for Credit or Store Cards

If you have been in debt with your credit, catalogue or store card for several years, or if your credit limit was increased without a financial assessment, you may be able to claim compensation.

You may have a complaint that the lender acted irresponsibly by allowing you to borrow more than you could afford.

FCA Rules on Responsible Lending

The following is a summary of the Financial Conduct Authority’s (FCA) rules:

• A lender must check whether credit is affordable when you apply.
• A lender should reassess affordability before increasing a credit limit.
• Credit is not affordable if making payments leaves you without enough money for essential expenses.
• Regularly borrowing more than you repay is unsustainable.
• You should be able to clear your balance within a reasonable period.

When You May Have Grounds to Complain

You may be able to file a complaint if the lender originally approved your credit while knowing:

• You had recent credit record issues such as defaults or missed payments.
• You had a different credit card with the same lender and were only making minimum payments.
• Your total borrowing seemed too high in relation to your income.

Irresponsible Credit Limit Increases

If the lender kept increasing your limit despite knowing:

• You had been making minimum payments for an extended period.
• You had recent missed payments or an arrangement to pay.
• Your overall debt levels had increased.

How Do I Claim?

If several of the above issues apply to your credit or store card, you need to contact the lender and file a complaint.

1. Log onto the lender’s website and locate the “complaints” section.
2. Write a complaint letter or email using the points above.
3. The lender has 8 weeks to respond.

If the bank rejects your complaint, you can refer it to the Financial Ombudsman Service: www.financial-ombudsman.org.uk.

What If I Don’t Have My Card Details?

If you do not have your card details, you can send a Data Subject Access Request (DSAR) to the provider. They have 1 month to provide this information.

Include as much information about yourself as possible, including:

• Full name
• Date of birth
• Address at the time of the account
• Any other relevant details