Not upheld: Irresponsible lending complaint against Ferratum UK Ltd

Decision detail

Summary

Miss J complained that Ferratum lent to her irresponsibly by providing three loans (£100, £400, and £600) between September and December 2017 without adequately checking her financial situation. She argued that if Ferratum had conducted more thorough checks, it would have discovered she had significant other debt and was in financial difficulty. Ferratum acknowledged the third loan was likely unsustainable after Miss J entered a debt management plan and offered to waive interest, but the offer was withdrawn. The ombudsman found that Ferratum's checks were proportionate to the circumstances, with loan amounts reasonable relative to Miss J's declared income of £2,150, and that Ferratum had no reason to investigate further based on available information. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the principle that lenders must take reasonable steps to ensure they do not lend irresponsibly through proportionate checks. Given the loan amounts (£100, £400, £600) compared to Miss J's declared income of £2,150, the relatively short lending period, and the credit reference agency information showing no significant other short-term credit and no arrears, the ombudsman considered Ferratum's checks proportionate. The ombudsman noted that in early stages of lending relationships, less thorough checks may be reasonable. Although Miss J was in financial difficulty, the ombudsman found no evidence that Ferratum was made aware of this or that anything would have prompted further investigation. Therefore, it was reasonable for Ferratum to rely on the information obtained.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website