Not upheld: Irresponsible lending complaint against Klarna Financial Services UK Limited

Decision detail

Summary

Mr E complained that Klarna irresponsibly provided him with a £1,020 point of sale loan he couldn't afford and subsequently reported a default on his credit file. The ombudsman found that Klarna's pre-lending checks were reasonable and proportionate, Mr E had sufficient disposable income to afford the credit, and his credit file showed no adverse information suggesting he was unable to manage his commitments. The ombudsman concluded Klarna made a fair lending decision based on the information available and was duty bound to accurately report the default. The complaint was not upheld and no remedy was ordered.

The Ombudsman's reasoning

The ombudsman applied the FOS general approach to unaffordable or irresponsible lending complaints. The key finding was that Klarna's pre-lending checks were reasonable and proportionate for the credit limit offered. Based on the information available to Klarna at the time, including Mr E's credit report showing no defaults or delinquencies and sufficient disposable income, the lender made a fair lending decision. While Mr E suggested his actual circumstances may not have been fully reflected, the ombudsman could only uphold a complaint where satisfied the business did something wrong, and found no evidence of this. Klarna was also duty bound to accurately report missed payments or defaults to credit reference agencies.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website