Not upheld: Irresponsible lending complaint against Ferratum UK Ltd

Decision detail

Summary

Miss G complained that Ferratum failed to carry out proper affordability checks when approving four short-term loans between February and April 2017. Ferratum initially could not locate the loans but later issued a final response letter offering a refund for loans 3 and 4, which it subsequently withdrew when the case was referred to the ombudsman. The ombudsman found that while Ferratum should have conducted more detailed checks before approving the largest loan (loan 4), there was insufficient evidence that the loan was unaffordable. The complaint was not upheld as Miss G's actual financial position at the time was not provided to establish that Ferratum's inadequate checks caused loss.

The Ombudsman's reasoning

The ombudsman applied the principle that lenders must take reasonable steps to ensure lending is not irresponsible and that repayments are sustainable. For loans 1-3, proportionate checks were carried out based on Miss G's declared income and the relatively modest loan amounts, with reasonable gaps between applications. For loan 4, while the ombudsman found Ferratum should have conducted more thorough checks given it was significantly larger than previous loans and Ferratum lacked information about Miss G's wider financial circumstances, the ombudsman could not conclude the loan was unaffordable without evidence of Miss G's actual financial position at the time. The absence of information about her living costs and other credit commitments meant the ombudsman could not establish that Ferratum's failure to conduct deeper checks caused loss.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website