Not upheld: Irresponsible lending complaint against Prodigy Finance LTD

Decision detail

Summary

Mr A complained that Prodigy Finance irresponsibly granted him a $45,000 USD fixed sum loan for his master's degree in June 2022. He argued that the firm accepted financial evidence (stocks and shares holdings) that it had previously rejected in his first application, and that he later lost these funds to a scam and could not find employment to repay the loan. The ombudsman found that Prodigy Finance's affordability assessment was reasonable and proportionate, based on appropriate use of projected graduate income and conservative assumptions. The key difference between the two applications was timing: the second application was approved when only three months of study remained, reducing the living costs Mr A needed to evidence. Although the firm could have been more proactive in discussing forbearance options, the ombudsman found no material loss resulted from this and did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman found that Prodigy Finance's lending decision was based on reasonable affordability checks appropriate to the circumstances. The key factor distinguishing the two applications was timing: by the second application, Mr A only had three months remaining on his course, reducing the living costs he needed to evidence. The stocks and shares account was not a material factor in the lending decision, but even if it had been, the cash holdings within it would have been a reasonable basis for assessment. The firm appropriately used projected graduate income based on statistical data, reduced conservatively by one-third. The ombudsman noted that Mr A provided no evidence that graduates in his field would earn insufficient income to repay the loan. While the firm could have been more proactive in discussing forbearance arrangements, this would not have materially changed Mr A's position as he made no payments and provided no evidence of inability to repay. The administration fee and interest accrual were clearly disclosed in the signed credit agreement.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website