Not upheld: Irresponsible lending complaint against Prodigy Finance LTD

Decision detail

Summary

Mr W complained that Prodigy Finance irresponsibly lent him a $22,500 study loan, misrepresented the loan nature, structured it unfairly regarding currency conversion charges, and terminated it without proper notice. Prodigy provided the first-year funding but declined the second-year application after discovering defaults on Mr W's credit file that had been omitted from the credit file he had provided initially. The ombudsman found Prodigy's initial lending decision was fair based on proportionate checks, the second-year offer was clearly provisional, the currency terms were clearly disclosed, and the termination issue was subject to court proceedings. The complaint was not upheld, though the ombudsman reminded Prodigy to treat Mr W positively given his vulnerabilities and financial difficulties.

The Ombudsman's reasoning

The ombudsman found that Prodigy conducted proportionate checks before the initial lending decision and reasonably concluded Mr W could afford repayments based on his income and sponsorship. The second-year loan offer was clearly marked as provisional, making it clear further assessment was required. Prodigy was entitled to decline the second-year loan based on the defaults discovered in its credit search that had been omitted from Mr W's provided credit file. The loan currency and associated charges were clearly disclosed in the credit agreement, which Mr W accepted with 14 days to change his mind. The termination issue was not decided as it is subject to ongoing court proceedings.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website