Next Retail Limited · DRN-6154856

Complaint Miss R has complained that Next Retail Limited (“Next”) irresponsibly provided her with a catalogue shopping account and credit limit increases. She’s said that this credit was unaffordable for her given the amount of credit she already had. Background This complaint concerns a catalogue shopping account Next initially provided to Miss R in November 2018. Miss R was initially given a credit limit of £600. This credit limit was then increased on nine occasions at the following times: April 2019 - £1,500.00 August 2019 - £2,000.00 December 2019 - £3,750.00 March 20211 - £750 December 2021 - £1,500.00 April 2022 – £3,000.00 August 20232 - £750 December 2023 - £1,500.00 April 2024 - £3,000.00. In January 2025, Miss R complained saying that the catalogue shopping account and the credit limit increases Next provided were unaffordable for her and that they resulted in her financial position worsening. Next didn’t uphold Miss R’s complaint. When responding to our request for its file on Miss R’s complaint, Next said that it believed Miss R had complained about the initial decision to provide Miss R with the account too late and this precluded us from looking at the complaint about this matter. One of our investigators looked at everything provided and was not persuaded that proportionate checks would have shown Next that it shouldn’t have provided Miss R with the catalogue shopping account or the limit increases. So she didn’t think that Miss R’s complaint should be upheld. Miss R disagreed with our investigator’s conclusions and asked for an ombudsman to review her complaint. My findings I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Basis for my consideration of this complaint 1 This limit increase took place after Miss R’s credit limit had been reduced to £300 in January 2021. 2 This limit increase took place after Miss R’s credit limit had been reduced to £500 in January 2023.

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There are time limits for referring a complaint to the Financial Ombudsman Service. Next has argued that Miss R’s complaint about the decision to provide her with an account was made too late because she complained more than six years after the decision to lend, as well as more than three years after she ought reasonably to have been aware of her cause to make this complaint. Our investigator explained why it was reasonable to interpret Miss R’s complaint as being one alleging that the relationship between her and Next was unfair to her as described in s140A of the Consumer Credit Act 1974 (“CCA”). She also explained why this complaint about an allegedly unfair lending relationship had been made in time. Having carefully considered everything, I’ve decided not to uphold Miss R’s complaint. Given the reasons for this, I’m satisfied that whether Miss R’s complaint about the specific lending decisions was made in time or not has no impact on that outcome. I’m also in agreement with the investigator that Miss R’s complaint should be considered more broadly than just the lending decisions. I consider this to be the case as Miss R has not only complained not about the respective decisions to lend but has also alleged that this resulted in her financial position worsening. I’m therefore satisfied that Miss R’s complaint can therefore reasonably be interpreted as a complaint about the overall fairness of the lending relationship between her and Next. I acknowledge Next may not agree we can look Miss R’s complaint about the decision to provide the account and the first six limit increases, but given the outcome I have reached, I do not consider it necessary for me to make any further comment, or reach any findings on these matters. In deciding what is fair and reasonable in all the circumstances of Miss R’s case, I am required to take relevant law into account. As, for the reasons I’ve explained above, I’m satisfied that Miss R’s complaint can be reasonably interpreted as being about the fairness of the lending relationship between her and Next, relevant law in this case includes s140A, s140B and s140C of the CCA. S140A says that a court may make an order under s140B if it determines that the relationship between the creditor (Next) and the debtor (Miss R), arising out of a credit agreement is unfair to the debtor because of one or more of the following, having regard to all matters it thinks relevant: • any of the terms of the agreement; • the way in which the creditor has exercised or enforced any of his rights under the agreement; • any other thing done or not done by or on behalf of the creditor. Case law shows that a court assesses whether a relationship is unfair at the date of the hearing, or if the credit relationship ended before then, at the date it ended. That assessment has to be performed having regard to the whole history of the relationship. S140B sets out the types of orders a court can make where a credit relationship is found to be unfair – these are wide powers, including reducing the amount owed or requiring a refund, or to do or not do any particular thing. Given Miss R’s complaint, I therefore need to think about whether Next’s decision to initially lend to Miss R and increase her credit limit, or its later actions resulted in the lending relationship between Miss R and Next being unfair to Miss R, such that it ought to have acted to put right the unfairness – and if so whether it did enough to remove that unfairness.

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Miss R’s relationship with Next is therefore likely to be unfair if it didn’t carry out reasonable and proportionate checks into Miss R’s ability to repay in circumstances where doing so would have revealed the catalogue shopping account or limit increases to been unaffordable, or that it was irresponsible to lend. And if this was the case, Next didn’t then remove the unfairness this created somehow. Were the decisions to provide the catalogue shopping account and subsequent credit limit increases unfair? 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. Next needed to take reasonable steps to ensure that it didn’t lend irresponsibly. In practice this means that Next needed to find out enough about Miss R in order to have a fair understanding of whether she could afford to repay what she was being lent. Any checks carried out to find this out, could take into account a number of different things, such as how much was being lent, the repayment amounts and the consumer’s income and expenditure. With this in mind, in the early stages of a lending relationship, I think less thorough checks might be reasonable. But certain factors might point to the fact that Next should fairly and reasonably have done more to establish that any lending was sustainable for the consumer. These factors include: • the lower a consumer’s income (reflecting that it could be more difficult to make any loan repayments to a given loan amount from a lower level of income); • the higher the amount due to be repaid (reflecting that it could be more difficult to meet a higher repayment from a particular level of income); • the greater the frequency of borrowing, and the longer the period of time during which a customer has been indebted (reflecting the risk that prolonged indebtedness may signal that the borrowing had become, or was becoming, unsustainable). There may even come a point where the lending history and pattern of lending itself clearly demonstrates that the lending was unsustainable. I’ve kept all of this in mind when deciding Miss R’s complaint. Next’s decision to provide Miss R with a catalogue shopping account What’s important to note is that Miss R was provided with a revolving credit facility rather than a loan. This means that to start with Next was required to understand whether a credit limits of £600 could be repaid within a reasonable period of time. It’s fair to say that a credit limit of £600 didn’t require especially high monthly payments, in order to clear the full amount owed within a reasonable period of time. Next has said that it carried out credit searches which showed that Miss R didn’t have any recent significant difficulties repaying credit. She had no defaulted accounts or county court judgments recorded against her. Ultimately, it was up to Next to decide whether it wished to accept the credit risk of taking on Miss R as a customer provided it was reasonably entitled to believe that the credit was

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affordable and it reasonably mitigated the risk of harm to her going forward. I’m satisfied that Next did mitigate this risk by providing Miss R with a low credit limit to begin with. As this is the case, I think that the checks Next carried out before providing Miss R with a catalogue shopping account with a limit of £600 were reasonable and proportionate. Therefore, I find that Next didn’t create any unfairness in its lending relationship with Miss R when it initially opened her account and granted the first five limit increases. Next’s decisions to increase Miss R’s credit limit As I’ve explained in the background section of this decision, Next offered to increase Miss R credit limit on a total of nine occasions. While the amount of some of the individual limit increases themselves could be said to be modest some of them were provided after Miss R’s limit had previously been decreased. In these circumstances, I would have expected Next to have found out more about Miss R’s income and expenditure (including her regular living expenses) before providing this credit limit increase. This is especially as by the time of the later increases it had been sometime since the account has been initially opened and there was the possibility that some of the information being relied on was now out of date. As there’s no suggestion that Next did this, I don’t think that the checks it carried out before it offered these limit increases were reasonable and proportionate. Even though I don’t think that Next did enough to establish whether the repayments to these limit increases were affordable, this doesn’t on its own mean that Miss R’s complaint should be upheld. This is because I would usually only go on to uphold a complaint in circumstances where I am able to recreate what the checks in question are likely to have shown – typically using information from the consumer – and this clearly shows that the repayments in question were unaffordable. Therefore, I’ve gone on to decide what I think Next is more likely than not to have decided, in relation to offering these limits increases, had it done that here. As I’ve explained, given the circumstances here, I would have expected Next to have had a reasonable understanding about Miss R’s regular living expenses as well as her income and existing credit commitments. I’ve considered the information Miss R has provided us with a view to understanding what such checks is more likely than not to have shown. Having done so, this information appears to show that Miss R did have the funds, at the time of the lending decisions at least, to make the required payments to limits of £750, £1,500.00, £2,000.00, £3,000.00 and £3,750.00. To explain, Miss R has provided some bank account statements. The first thing for me to say is that Next did not need to obtain Miss R’s bank statements before lending. So I’ve not looked at these bank account statements because I’m of the view that Next ought to have obtained them from Miss R. Nonetheless and in any event, these statements don’t clearly show me that Miss R was struggling financially. Indeed, the information provided shows Miss R did receive sufficient funds to be able to repay this credit. As this is the case, I’m afraid that I’ve not been provided with sufficient evidence which corroborates what Miss R has said about not being able to make the increased monthly payments required should she have used the additional credit offered at the time Next offered to increase her credit limit. This is especially as I also need to consider that the credit checks Next carried out on Miss R didn’t show that any significant adverse information was being reported about her either.

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So overall and having carefully considered everything and while I appreciate that this will disappoint Miss R, I’ve not been persuaded that reasonable checks would have shown Next that it shouldn’t have provided Miss R with this catalogue shopping account or the limit increases it did. Overall, and based on the available evidence I don’t find that the lending relationship between Miss R and Next was unfair to Miss R. I’ve not been persuaded that Next created unfairness in its relationship with Miss R by unfairly lending to her whether when initially agreeing to provide her with catalogue shopping accounts, or in respect of increasing her credit limit. And I don’t find Next treated Miss R unfairly in any other way either based on what I’ve seen. So overall and having considered everything, while I can understand Miss R’s sentiments and appreciate why she is unhappy, I’m nonetheless not upholding this complaint. I appreciate this will be very disappointing for Miss R. But I hope she’ll understand the reasons for my decision and that she’ll at least feel her concerns have been listened to. My final decision For the reasons I’ve explained, I’m not upholding this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss R to accept or reject my decision before 20 April 2026. Jeshen Narayanan Ombudsman

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