American Express Services Europe Limited · DRN-6231368

The complaint Mr K complains that American Express Services Europe Limited (American Express) lent to him irresponsibly by not conducting sufficient affordability checks when issuing him two credit cards in January and March 2023. He complains he was given credit limits that were too high given his financial situation at the time causing him to struggle to make sustainable payments on the cards and causing financial difficulties. What happened Mr K applied to American Express for two credit cards in early 2023. These were issued as shown below Date card issued Credit Limit January 2023 £15,000 March 2023 £7,600 In summary, Mr K complains that American Express conducted insufficient affordability checks when approving both cards. He says that had American Express performed further checks, they would have seen he was highly unlikely to afford sustainable payments. He says American Express would have seen indications of existing financial difficulties and should not have set such high credit limits in those circumstances. Mr K believes this was irresponsible lending by American Express. He states this has caused him significant financial difficulties which he is now struggling to manage. Mr K complained to American Express in July 2025. They considered his complaint replying in August 2025. In their final response letter, American Express stated they felt appropriate checks were made at each lending decision. These included identity, address and credit checks. As American Express found no breach of their own internal lending processes, they did not uphold Mr K’s complaint. As Mr K remained unhappy, he brought the matter to the service. An investigator considered the merits of Mr K’s complaint finding that the affordability checks performed by American Express were insufficient for this lending. She believed that had sufficient checks been performed it would likely have shown Mr K would probably not be able to afford sustainable repayments on total credit of £26,600 in a reasonable time. American Express didn’t agree with the investigator’s view and so the case has been passed to me to make a final decision. 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. 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.

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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 Mr K’s complaint. . I have received, read and considered the additional information provided to me by Mr K in response to my provisional decision. I have also reviewed all the evidence available to me in reaching this decision. I will address Mr K’s additional information at the relevant points of this decision. In his response to my provisional decision, Mr K observes that the original investigator and I have reached different outcomes about affordability and specifically sustainability of payments. I will address this difference is approach to the lending before looking at each lending decision in turn. In her view, the investigator chose to consider the entirety of the lending together given the proximity of the lending decisions – that is to consider total credit of £22,600 and what might be sustainable for that position. I was not minded to combine two lending decisions even when only two months apart. In my view, American Express made two separate decisions to lend based on two separate applications. My approach was to consider each application and repayment in isolation. With specific reference to sustainable repayments, I elected to use a considerably longer period over which payments would be repaid than used by the investigator in reaching her view. I felt that on lending of this size, a repayment period of six years was more reasonable than the shorter period used in the calculations within the view. These differences impact significantly on the required monthly sustainable payments and led in part to the difference in our outcomes. Initial application (card number 1) When Mr K applied for the first American Express card in January 2023 he declared an annual gross income of £37,000 including bonuses. American Express validated a slightly lower figure of £34,000 using an external credit check. American Express assumed 60% of Mr K’s total income was non-discretionary spending. American Express has indicated this is their preferred method of assessing affordability when making a lending decision rather than carrying out more specific income and expenditure checks. Given the potential delay in credit files being updated and the total lending of £15,000 being a significant proportion of Mr K’s annual income, I do not believe these checks alone were sufficient or appropriate. I would have expected a more individual assessment of Mr K’s actual financial situation at the time of the lending decision rather than relying on averaged models and assumptions alone. American Express indicate they checked Mr K’s credit file, though the report extract shared with me is limited in its scope. When considering affordability, I would have expected American Express to consider how other lines of credit were being managed in more detail than was shown by the credit file supplied by American Express. I would have expected external checks for County Court Judgements which are not mentioned by American Express or shown in the credit file outcome provided by them. I would also have expected American Express to have satisfied themselves that Mr K could afford to make sustainable payments on £15,000 credit. This is more than affording minimum monthly payments and requires that Mr K is able to make the payments in a reasonable time without undue difficulty, while being able to meet other commitments and without having to borrow further. Based on American Express’ own repayment calculator repaying the full £15,000 credit limit over a reasonable period for such an amount (I have used six years), would require monthly

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payments of at least £440. I don’t believe American Express made sufficient checks to know whether Mr K could sustainably repay this. Having found that the affordability checks performed by American Express were insufficient, in this case, I must consider what appropriate checks might have looked like and what was likely to have been found if they had been made. For lending of this amount given Mr K’s gross income, I would have expected more detailed income and expenditure checks. Examples could have included the use of a richer credit file than that provided by American Express, checks for County Court or similar adverse judgements, application of ONS data modelling and/or asking Mr K for a more granular view of his actual expenditure. To approximate what appropriate checks would have shown, I have referred to the credit report Mr K provided along with that used by American Express at the time of the lending. I have also used current account statements provided my Mr K in his complaint to the service, but only to the extend needed to approximate that lower level summary of his expenditure. In his response to my provisional decision, Mr K asks me to consider the detailed content of his current account statements as evidence of existing financial difficulty. It is important that I consider only what was available to American Express at the time or in this case what checks reasonable and proportionate for the lending would have shown. As explained above, I agree with Mr K that the checks performed at this stage by American Express were insufficient, but that does not mean I believe a full forensic examination of his accounts would have been necessary or proportionate to reach a lending decision. American Express should have done more to understand current expenditure, but it would not have been necessary to examine detailed current accounts in my view. In his complaint, and in his response to my provisional decision, Mr K states American Express should have been aware of a current account overdraft at the time of lending. Having said that appropriate checks need not have included full bank statements, and having examined the credit files, I am not persuaded that American Express would have had sight of any overdraft at the time of the decision even if appropriate checks had been made. At the time of the first application, Mr K’s report showed a personal loan which had been managed well and was just about to conclude. It also showed an existing credit card. While this card showed no defaults or late payments, it did show that Mr K had been and remained slightly over his limit. This should have been of more interest to American Express. Had American Express consulted a more detailed credit file than that it supplied to me, it would likely have seen a current account apparently being run without concern, a well- managed loan nearing the end of its term, good utility bill management and no obvious payday loans or active County Court Judgments. It would also have seen an existing credit card slightly over its limit but being paid regularly. In my view, there is nothing in the credit file that was likely to be resolved by asking for detailed bank statements. Had American Express asked for a more detailed expenditure breakdown from Mr K then based on the current account statements Mr K has provided in support of his complaint, it is likely they would have found that Mr K had sufficient disposable income to be able to afford the lending. It follows that I think American Express made a fair lending decision for the first card. Second application (card 2)

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When American Express made a further lending decision for a second card two months later, their general approach was the same as described above. The second card was issued with a limit of £7,600 For the reasons already given, I believe the level of checks performed by American Express remain inadequate. This is particularly the case given the proximity to their earlier lending decision and where over £10,000 available credit already existed. This also represented a significant increase in overall lending without further verification of expenditure. Again, using American Express’ own repayment calculator repaying the additional £7,600 credit limit over a reasonable period for such an amount (I have used 54 months), would require monthly payments of at least £250. I don’t believe American Express made sufficient checks to know whether Mr K could sustainably repay this. Had more granular income and expenditure details been requested at this point, American Express are likely to have found the financial position was broadly consistent. American Express would have seen that Mr K had concluded his personal loan but remained over limit on his non American Express credit card. His existing American Express card had raised no concerns over those two months. Mr K’s income remained broadly in line with that declared when he applied for the card. I, have examined the available evidence and made allowance for the sustainable payment needed for card one. Once this has been considered, American Express would have found that Mr K’s financial state was such that he was likely to be able to sustain payments for card two. Given this, and accepting that it will disappoint Mr K, I find that American Express also made a fair lending decision for the second card. In Mr K’s response to my provisional decision, I am asked to consider some additional points. I have given these thought, but in this case, they do not change my decision. Specifically, Mr K asks me to consider the volatility in repayments when considering sustainable repayments pointing out his repayments would increase if he used more of his available credit. In my calculations, I have assumed that the full amount of credit was utilised on day one and considered the sustainable repayment of that amount over a reasonable time. I believe this addresses Mr K’s concern on this point. I am also asked to give more weight to four months over limit markers on Mr K’s credit card such that this should have prevented any future lending. I am not persuaded on that point. I am also asked to reduce the weight given to the absence of public records such as County Court Judgments, IVAs or bankruptcies as these ‘catastrophic markers’ and do not alone define irresponsible lending. I can reassure Mr K that I have considered all markers (positive and otherwise) when considering the credit file and lending decision in the round. Since receiving his comments, I have reflected on whether appropriate weight has been given to these. On this case and credit file, I am satisfied that they have and these do not change my decision. In reaching my conclusions, I’ve also considered whether the lending relationship between Mr K and American Express might have been unfair to Mr. K under s140A of the Consumer Credit Act 1974 (“CCA”). However, for the reasons I’ve already explained, I’m satisfied that American Express did not lend irresponsibly when providing Mr K with two credit cards. 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 decision is that I do not uphold Mr K’s complaint against American Express Services Europe Limited. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr K to accept or reject my decision before 14 April 2026. Richard Bellamy Ombudsman

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