Not upheld: Irresponsible lending complaint against Salary Finance Limited

Decision detail

Summary

Mr W complained that Salary Finance irresponsibly lent him £3,500 in July 2024 without conducting adequate affordability checks. He argued that more thorough checks would have revealed he could not afford the loan. Salary Finance calculated Mr W had around £480 monthly disposable income based on verified income of £1,830, existing debts of £11,500, and estimated living expenses of £875. The ombudsman found that while Salary Finance failed to account for an overdraft repayment arrangement, Mr W would still have had over £400 disposable income monthly, which is reasonable. The credit file showed no recent adverse information and Mr W had recently settled three loans, indicating improving financial management. The complaint was not upheld as the checks were proportionate and there was nothing suggesting unaffordability.

The Ombudsman's reasoning

The ombudsman found that Salary Finance completed proportionate affordability checks appropriate for the loan amount and circumstances. Although Salary Finance failed to account for the overdraft repayment arrangement in its calculations, even with this included, Mr W would have had over £400 monthly disposable income, which is a reasonable buffer for emergencies. The credit file showed no recent adverse information, Mr W had recently reduced his borrowing substantially, and there was nothing that should have prompted further investigation. The ombudsman noted that Mr W's gambling and undisclosed borrowing were not visible to Salary Finance and there was no obligation to conduct more thorough checks such as bank statement reviews.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website