Good to know: You do not need to use a claims management company to make your complaint to your lender. If your complaint is not successful you can refer it to the Financial Ombudsman Service yourself for free.

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Catalogue accounts are revolving credit facilities that function similarly to credit cards: the customer has a credit limit and will need to make monthly repayments towards an outstanding balance.

Catalogue shopping can be appealing for some customers who impulse buy fashionable goods but would struggle to afford to pay for the goods in one lump sum. Lenders are aware of this and play to this with wording on their websites. We’ve seen examples which say, “Whether it’s fashion, home or gifts, simply shop and pay later, with no interest if you pay in full” and “With no card details necessary, it’s never been quicker or easier to buy.”

The credit limit on the catalogue shopping account might start quite low, but lenders will gradually increase the credit limit on the account. Lenders need to make sure that they carry our enough checks before increasing the credit limit. This includes lenders considering what it knows about the way the customer has ran their account up to that point, before agreeing an increase to the credit limit. Of course, this does not necessarily mean these lenders carried out the checks they ought to have done. One Ombudsman explained an example of this:

“Ms P’s outstanding balance increased significantly. And she continued to make only the minimum payment that was required. So I think that might have suggested to JDW that she was finding it difficult to manage her credit in a sustainable manner. I think it might have been reasonable at that time for JDW to probe deeper into Ms P’s finances to establish her true financial position.”

We know that when lenders are expected to probe deeper into the customer’s true financial situation, the lender may find that any further credit is simply unsustainable. We’ve seen examples where the lender did not realise how low the customer’s income truly was, or that the customer was in a debt spiral of using payday loans – whilst also trying to maintain the minimum repayments to their catalogue account.

If your claim is successful, you can get the interest charges back on any balances over and above a responsibly given credit limit.

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Good to know: You do not need to use a claims management company to make your complaint to your lender. If your complaint is not successful you can refer it to the Financial Ombudsman Service yourself for free.