Shop Direct Finance Company Limited · DRN-6240009

The complaint Miss E complains that Shop Direct Finance Company Limited trading as Very didn’t sufficiently check she could afford a credit facility and subsequent credit limit increase before they agreed to lend to her. And that they failed to support her when she experienced financial difficulty. What happened Around May 2021 Miss E applied for a credit facility account with Very. Her application was successful with Very applying a credit limit of £250. Around August 2022 Very increased Miss E’s credit limit by £800 to £1,050. Miss E said she struggled to sustain the repayments and sought support from Very. She complained to Very saying the lending wasn’t affordable and that they failed to provide support which had caused her distress and inconvenience. Very said their checks were reasonable and proportionate. And that they’d supported Miss E when she made them aware of her financial difficulties by providing payment holidays, reduced repayments and referring her to debt advisory services. Miss E wasn’t happy with Very’s response and referred her complaint to us. Our investigator said Very’s checks were reasonable and proportionate for the initial account opening. But that they needed to do more for the credit limit increase. But after considering Miss E’s bank statements found the lending decision made by Very to be fair. And said that Very had applied forbearance and support to Miss E when they became aware of her financial difficulties. They didn’t ask Very to do anything differently. Miss E didn’t agree and asked for an ombudsman 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 overall conclusions as the investigator, and for broadly the same reasons. Whilst I’ve read and considered everything, if I don’t mention any specific point, it’s not because I failed to take it on board and think about it, but because I don’t think I need to comment on it to reach what I think is a fair and reasonable outcome. This is not meant as a discourtesy but rather reflects my role of resolving disputes with minimum formality. We’ve set out our general approach to complaints about unaffordable and irresponsible lending, including the key relevant rules, guidance and good industry practice, on our website. And I’ve applied this approach to Miss E’s complaint. Very needed to take reasonable steps to ensure that they didn’t lend irresponsibly. While there isn’t a set list of checks a lender must do, they should have carried out proportionate checks to make sure Miss E could afford to repay what she was being lent in a sustainable

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manner. These checks could consider several things, such as how much was being lent, the repayment amounts and the consumer’s income and expenditure. What’s important to note is that Miss E was provided with a revolving credit facility rather than a loan. And this means that Very was required to understand whether a credit limit of £250 could be repaid within a reasonable period. Very said they used application and credit reference agency (CRA) data to assess Miss E’s credit worthiness. Miss E declared an annual income of £17,001 and that she was living with her parents. Very’s CRA checks showed Miss E had a low level of indebtedness. Very applied a credit limit of £250 which would require a low monthly payment to clear the full amount that could be owed within a reasonable period. And given Miss E said she was living at home with parents and her declared income, I think that Very was reasonably entitled to conclude that she would have the funds to sustain the very low monthly payment required for such a credit limit. Early August 2022 Very applied a further £800 to increase Miss E’s credit limit to £1,050. They did similar checks. The check carried out prior to the credit limit increase showed Miss E an overall debt of £1,006 (this did increase September 2022 to £3,516 which was after the credit limit increase was applied). And that Miss E had fallen one month behind in her credit commitments in the preceding six months. Very also had internal data as to how Miss E was managing her account with them. I can see from Very’s records that Miss E‘s outstanding balance on several occasions exceeded her £250 credit limit. And that she had been one month behind with her repayments a few months prior to the credit limit increase, although she did bring her account up to date the following month. Generally, Miss E only paid the minimum amount required. So, although the repayment for the credit limit increase would be relatively low, I think Very should have looked a little further into Miss E’s financial situation. But given the type and amount of credit I wouldn’t have expected a rigorous check to be done. Miss E has provided her bank statements for the three months prior to the credit limit increase. I wouldn’t generally expect a lender to ask for bank statements but for our purposes they provide a good indicator of Miss E’s circumstances. These statements show Miss E had a regular income, outgoings for food, transport communications and board. And when Miss E’s regular living costs and non-discretionary expenditure is deducted from the income she received, she does appear to have enough in funds left over to make the increased repayments needed for the credit limit increase offered. While Miss E did at times use her overdraft facility this wasn’t persistent. And there weren’t any signs of financial vulnerability such as unpaid direct debits. Miss E appears to have been meeting her credit commitments which were low, whilst having sufficient disposable income for discretionary and unexpected spending. So, I’m satisfied had Very checked further they would have still lent to Miss E as there was insufficient evidence to show she couldn’t sustain the repayments. Miss E contacted Very to explain she was experiencing financial difficulty. The relevant guidance says lenders should consider consumers in default or in arrears difficulties with forbearance and due consideration. For example, suspending, waiving or cancelling any further interest or charges, allowing arrears to be deferred, accepting token payments for a reasonable period, informing the consumer that free debt advice is available and provide

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details. I can see that Miss E stopped making payments to her account around July 2023, and after Very were made aware of her financial difficulties they no longer applied any account interest from around November 2023. Very placed Miss E’s account on hold after which in July 2024 an agreed six-month payment arrangement of £25 a month was put in place. When this arrangement was ending, I can see Miss E asked for another arrangement to be put in place for the same amount with a view to increase this to £35 a month, but this would still have been below her contractual repayment amount. And the relevant guidance says a lender can accept a token amount for a reasonable period which I think Very did. I can see that Very referred Miss E to a debt counselling service so that a longer-term plan could be considered and allowed several months without interest and charges being applied for Miss E to seek help. But I can’t see Miss E chose to do this as she wanted to continue with the short-term arrangement that had previously been put in place. Very has an obligation to treat Miss E fairly when she tells them about her financial difficulties. And once Very was made aware of Miss E’s financial difficulties, they took the above actions. I’m sorry to hear about the difficulties Miss E has experienced. But I must be fair to both parties. I can’t reasonably say, on the available evidence, that Very wasn’t entitled to act as they did. I can see that Miss E feels strongly about her complaint and will therefore be disappointed by my decision. I hope she takes some reassurance as to why I’ve reached the decision I have in not asking Very to do anything differently here. Although I’m not upholding this complaint, I’d like to remind Very of their obligation to continue to exercise forbearance if they intend to collect any outstanding balance remaining on the account, and it’s the case that Miss E is still experiencing financial difficulty. I’ve also considered whether Very acted unfairly or unreasonably in some other way given what Miss E has complained about, including whether their relationship with her might have been viewed as unfair by a court under Section 140A Consumer Credit Act 1974. But for the reasons I’ve already given, I don’t think Very lent irresponsibly to Miss E or otherwise treated her unfairly. I haven’t seen anything to suggest that s.140A or anything else would, given the facts of this complaint, lead to a different outcome here.

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My final decision I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss E to accept or reject my decision before 22 April 2026. Anne Scarr Ombudsman

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