Not upheld: Irresponsible lending complaint against Ferratum UK Ltd

Decision detail

Summary

Mr J complained that Ferratum lent to him irresponsibly in August 2017 for a £400 loan and failed to enquire about his mental health. He also alleged that Ferratum bullied him and refused to negotiate when he attempted to settle the debt, which had grown to £800 by 2020. The ombudsman found that Ferratum's checks were proportionate for a first loan to a customer with a declared income of £2,001 per month and repayments of approximately £202 per month. No evidence was provided that Ferratum knew or should have suspected mental health issues, and FCA regulations do not require enquiry absent such knowledge or reasonable suspicion. The ombudsman found no evidence of unfair treatment in debt collection, noting that Mr J failed to respond to Ferratum's contact attempts. The complaint was not upheld and the debt was not written off.

The Ombudsman's reasoning

For a first loan of £400 to a customer with a declared income of £2,001 per month and repayments of approximately £202 per month, proportionate checks including employment verification, salary confirmation, and a credit check were appropriate and not excessive. The ombudsman would not have expected an in-depth financial review for a new customer seeking a modest sum. Bank statements showed Mr J had sufficient income and existing credit facilities that would likely have appeared on a credit search, revealing nothing of concern. Regarding mental health, the FCA regulations require firms to assume mental capacity unless they know or have reasonable grounds to suspect otherwise. Mr J provided no evidence of mental health issues in 2017 and no behavioural indicators that would have alerted Ferratum to investigate further. The ombudsman found no evidence of unfair treatment in debt collection as Mr J failed to respond to Ferratum's contact attempts.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website