Not upheld: Irresponsible lending complaint against Ferratum UK Ltd

Decision detail

Summary

Mr K complained that Ferratum UK Ltd irresponsibly provided him with seven payday loans in quick succession while he was struggling financially. Ferratum agreed to uphold the complaint for loans 5-7 but not loans 1-4. The ombudsman found that Ferratum's lending decisions for loans 1-4 were based on proportionate checks appropriate to the early stages of the lending relationship, with information suggesting the loans were affordable based on Mr K's declared income and background checks. While loan 4 presented early warning signs, these were insufficient to establish unsustainable lending. The ombudsman did not uphold the complaint for loans 1-4 but confirmed Ferratum should complete its offer to refund interest and charges and remove loans 5-7 from Mr K's credit file.

The Ombudsman's reasoning

The ombudsman applied the FOS approach to short-term lending complaints, considering proportionality of checks based on lending relationship stage and loan amounts. For loans 1-4, the ombudsman found that Ferratum's checks were proportionate for the early stages of the lending relationship and loan amounts involved. The information gathered suggested loans were affordable based on Mr K's declared income. While loan 4 presented early warning signs (same borrowing amount as loan 1 six months later and evidence of other active short-term lending), these were not sufficient to make a responsible lender conclude the loan was unsustainably unaffordable. The ombudsman acknowledged Mr K's actual financial difficulties may not have been fully reflected in the information available to Ferratum, but found no evidence of unfair or unreasonable lending decisions.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website