Not upheld: Irresponsible lending complaint against Salary Finance Loans Limited

Decision detail

Summary

Mr L complained that Salary Finance irresponsibly lent him £2,000 in August 2023, claiming the firm failed to conduct proper checks and that he was exceeding his limits prior to lending. Salary Finance defended their decision, stating they had verified his income with his employer, obtained credit reference agency data, and used ONS data to calculate his disposable income at around £700 per month. The ombudsman found that Salary Finance's affordability checks were proportionate to the circumstances of the relatively modest £2,000 loan, and that based on Mr L's verified salary of £39,000 and calculated disposable income, the monthly repayment of £192.18 was sustainable. Although Mr L had some overlimit instances and past financial difficulties, recent months showed improvement and there was no evidence of recent payday lending. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Salary Finance's affordability checks were proportionate to the circumstances. The loan amount of £2,000 was relatively modest, and based on Mr L's verified salary of £39,000, outstanding debt of £6,500, and calculated disposable income of £700 per month, the monthly repayment of £192.18 was sustainable. Although Mr L had some overlimit instances and past financial difficulties, recent months showed improvement. The CRA data did not show recent payday lending (most recent settled in 2020), so this was not a reason to decline. The checks were borrower-focused and considered whether Mr L could sustainably repay without adverse consequences.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website