Credit giant Aqua increased its credit limit and loaned 13 payday loans to a struggling mother
The Financial Ombudsman Service has sided with customers in several complaints against the company, who say it should not have lent them or increased their credit limits.
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The Aqua credit card company has lost several disputes with customers who claim they falsely loaned money and increased credit limits to people who would have trouble paying it back.
These included people about the benefits and problem gamblers, some with so much debt that they had to take out 13 payday loans.
The Financial Ombudsman Service (FOS) has sided with the consumer in nine decisions against New Day, the parent company of Aqua, in the past three months alone.
Customers are anonymous to protect their identity.
One of those clients, Mrs S, took out a New Day card in June 2019 with a credit limit of £ 450.
The customer said she used the money to gamble and approached her credit limit.
Despite this, New Day raised it to £ 1,200 in September 2019, and Ms S complained to FOS that the company should have prevented this.
New Day told FOS he had no way of knowing about the gambling problem, but admitted it was wrong to increase the credit limit.
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The FOS has said New Day should reimburse all unpaid interest and charges from the time it increases the credit limit beyond £ 450.
A client, Miss R, took a New Day credit card in April 2014 with a credit limit of £ 250.
Between July 2014 and July 2017, New Day increased the credit limit three times, to over £ 1,350.
Miss R, a benefit claimant, said she couldn’t afford the credit increases and had to embark on a debt repayment plan to pay the interest.
She complained to New Day, then to FOS.
The FOS said: “As Miss R had to pay a significant amount of interest and fees due to the unfair increase in her credit limit from July 2014, I think she lost because of this that New Day did wrong. So New Day should fix things. “
The Ombudsman recently ordered New Day to drop any interest charged outside the original £ 250 limit and pay £ 150 in compensation, if Miss R agreed.
He also said the company would have to buy the debt back from the collection company it sold it to.
Another Aqua client, Miss F, 19, also got a New Day card with a limit of £ 250 in November 2014. This amount has been steadily increased and stood at £ 4,700 in August 2016.
She said the company shouldn’t have increased its limits and had to take out 13 payday loans because of the debt it incurred.
At first, Miss F had no payday loans on file.
But when the credit limit climbed to £ 4,700, the FOS said his overall debts were over £ 13,000 and “there were payday loans as proof”.
The FOS added: “There were 13 payday loans, three of which had been taken out in the last three months. At that time, it looked like Miss F was in trouble and so – at that time, Aqua should have asked more questions about Miss F’s situation – before offering the limit increase to £ 4,700. “
The ombudsman asked Aqua to reimburse the interest and all charges billed from that time until the account reimbursement date. “
A spokesperson for New Day said, “We strive to help customers responsibly manage their credit products. We aim to provide each customer with a credit limit based on their individual circumstances, subject to full accessibility, regulatory and credit risk procedures.
“At the time of application, all customers are encouraged to select how they would like to be contacted for future credit limit increase offers. Customers can choose to apply them automatically, in which case they will be notified of the proposed increase and then have the opportunity to review and decline the offer within at least 30 days, after which the increase will be applied.
“A customer can change these preferences with New Day at any time after their account is opened and choose not to be offered a credit limit increase at any time. In addition, we are always happy to reduce the limits if the customer wishes. “