Virgin Money suspends credit cards with no warning

7 May 2020, 11:58   By Dr Lucy Brown, Editor

Bank has been criticised for freezing the credit cards of up to 32,000 customers without giving them any warning.

Virgin Money say the suspensions were a result of routine affordability checks and accounts have been blocked with immediate effect.

However, given the financial pressures on customers due to the Covid-19 outbreak, the bank is being criticised for suspending financial lifelines for customers.

Virgin Money responded by saying accounts could be reviewed on a case-by-case basis and no customers who had already said they were in financial difficulty had been blocked.

virgin money branch
Credit: Roger Utting/

No warning

Up to 32,000 Virgin Money customers were contacted earlier this week to say their credit cards had been suspended immediately.

Virgin Money said the suspensions were due to routine affordability checks conducted by them as a responsible lender, but the timing of the decision has been criticised as customers struggle with financial pressures connected to the coronavirus crisis.

Although the bank argued that no customers who had previously warned the bank they were struggling with the finances have had their cards blocked, it's feasible that some were using the credit cards as a lifeline during the crisis and will be hit hard by this move.

Customers can contact Virgin Money if they wish for their account to be reopened, and the bank said these requests will be dealt with on a case-by-case basis and can be fast-tracked if necessary.

They reiterated their commitment to supporting customers affected by coronavirus and urged them to get in touch if they're worried about their finances.

Coronavirus and credit cards

Virgin Money's timing may be a result of routine checks, but it's possible the bank may be rebuked by the Financial Conduct Authority (FCA) for the way they've handled these suspensions.

One of the FCA's actions to support customers during the Covid-19 outbreak is to compel credit card providers to offer payment freezes of up to three months to customers.

While Virgin Money will say they have protected those who have told them they're struggling, their actions may not have gone far enough to protect vulnerable customers and may have breached the spirit of the coronavirus support measures.

In addition, it's possible some Virgin Money customers have fallen foul of the persistent credit card debt rules which came into force earlier this year and were intended to guide lenders in their dealings with customers in credit card debt for 36 months.

The FCA warned that blanket suspensions of credit cards wasn't an appropriate way to deal with this back in February, and it's unclear whether any of these persistent debt customers have been caught up in the routine affordability checks Virgin Money mention.

Virgin Money struggles

Virgin Money confirmed a set of poor financial results earlier this week, posting a £7m loss compared to a £274m profit posted a year earlier. The slump has been driven by Covid-19 and fears of bad loans.
Covid-19 has also prompted the bank to halt the closure of 22 branches across the Virgin Money, Clydesdale and Yorkshire brands, and the CEO would not confirm this week when the closure programme would resume.

The closure and consolidation programme followed the decision to rebrand Clydesdale and Yorkshire to Virgin Money after the acquisition of Virgin Money by the group in 2018.

Virgin's brand and name recognition was judged to be greater than their parent company, although the Virgin brand has been in the spotlight for negative reasons during the Covid-19 crisis as their aviation companies struggle.

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