Next Retail Limited · DRN-6166163

The complaint Miss M complains that Next Retail Limited (“Next”) lent to her irresponsibly. What happened In January 2021, Miss M applied for an online account with Next. Her application was approved and she was provided with a £600 limit. Next increased her limit in August of 2021 and then decreased it in November that year. Event Date Amount Account Opening January 2021 £600 Credit Limit Increase August 2021 £900 Credit Limit Decrease November 2021 £750 In December of 2025, Miss M complained to Next that sufficient checks weren’t completed to ensure she could repay the debt. Next responded to the complaint, they rejected it; saying their decision to lend to her was not irresponsible and their affordability checks had been proportionate. Miss M disagreed, so the complaint was referred to our service. An Investigator here found that Next conducted reasonable and proportionate checks and the decision to lend was fair. Miss M disagreed – she felt that the checks performed by Next fell below regulatory standards and that Next had relied too heavily on credit checks and credit scores. Because an agreement couldn’t be reached, 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. Having done so, I’ve reached the same outcome as the Investigator, largely for the same reasons. I know this is likely to come as a disappointment to Miss M, but I’ll explain my reasons why. The rules and regulations in place at the time Next provided Miss M with the account required them to carry out a reasonable and proportionate assessment of whether she could afford to repay what she owed in a sustainable manner. This is sometimes referred to as an ‘affordability assessment’ or ‘affordability check’. The checks had to be ‘borrower’ focused. This means Next had to think about whether repaying the credit sustainably would cause difficulties or adverse consequences for Miss M. In other words, it wasn’t enough for Next to consider the likelihood of them getting the funds

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back or whether Miss M’s circumstances met their lending criteria – they had to consider if Miss M could sustainably repay the lending being provided to her. Checks also had to be ‘proportionate’ to the specific circumstances of the lending. In general, what constitutes a proportionate affordability check will be dependent on a number of factors including – but not limited to – the particular circumstances of the consumer (e.g. their financial history, current situation and outlook, any indications of vulnerability or financial difficulty) and the amount/type/cost of credit they were seeking. I’ve kept all of this in mind when thinking about whether Next did what was needed before lending to Miss M. Next said they used Miss M’s application data and cross checked this with Credit Reference Agency data (CRA). The information obtained showed Miss M had one historical default from 31 months ago and seven active accounts which were not in arrears. Next provided Miss M with a revolving credit facility; meaning the monthly required payment is based on the transactions made. However, when carrying out their assessment, the relevant guidance requires a lender to assume that the entire credit limit is utilised and then assess whether it can be repaid within a reasonable period of time. Next was approving a credit limit of £600, so they could assume Miss M would need to pay a relatively modest amount of £30 per month to clear the full amount within a reasonable period of time. Next had mitigated the risk to Miss M by only agreeing to a modest credit limit, so I’m satisfied the checks Next did were proportionate and fair. I think anything further would have been disproportionate given the amount being borrowed. Miss M has also questioned the robustness of the checks performed when Next increased her credit limit from £600 to £900. I’ve seen evidence that Miss M’s creditworthiness was reviewed on a monthly basis. Her credit was increased when her profile became slightly more favourable and when it worsened, Next adjusted her credit accordingly. Next’s records show they were consistently assessing Miss M’s full financial picture and actively managing her limits in line with what they found. Based on what I’ve seen, the ongoing checks and resulting credit limits were also proportionate and fair. Miss M has shared with us that she was heavily reliant on her overdraft at the time Next provided this credit. She believes that they should have taken this element of her credit profile more seriously. Whilst I agree that the persistent use of an overdraft should be considered within creditworthiness assessments, I don’t believe that the use of an overdraft should be a barrier to customers when borrowing, so I wouldn’t have expected Next to decline Miss M outright for utilising her overdraft. Nor would I expect Next to delve deeper based on one line of credit being utilised near its limit. Miss M’s full financial picture was assessed and considered in the round and I believe this was a fair approach for Next to take. Overall, based on the information available to Next at the time of application, I think they performed proportionate checks and reached a fair decision to lend to Miss M. In reaching my conclusions, I’ve also considered whether the lending relationship between Next and Miss M might have been unfair to Miss M under s140A of the Consumer Credit Act 1974 (“CCA”). However, for the reasons I’ve already explained, I’m satisfied that Next did not lend irresponsibly when providing Miss M with the account or by increasing her 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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While it’ll likely come as a disappointment to Miss M, I won’t be upholding her complaint against Next for the reasons explained above. My final decision It’s my final decision that Next Bank Limited didn’t act unfairly when providing Miss M with her account. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss M to accept or reject my decision before 27 April 2026. Caroline Oliver Ombudsman

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