Upheld: Irresponsible lending complaint against Equifinance Limited
Financial Ombudsman decision DRN-5771731 of 2025-08-22T00:00:00+00:00. Irresponsible lending complaint against Equifinance Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-5771731 |
|---|---|
| Decision date | 2025-08-22T00:00:00+00:00 |
| Firm | Equifinance Limited |
| Product | Mortgage |
| Claim type | Irresponsible lending |
| Outcome | Upheld |
| Remedy | Equifinance Limited should: (1) Remove all interest and fees (except the broker fee of £4,995) from the loan, leaving only the capital borrowed and broker fee; (2) Not charge any further interest or fees; (3) Treat all payments made by Mr B and Miss O as payments to reduce capital; (4) If capital balance would have been cleared by now, refund the excess with simple interest of 8% from date of payment until settlement; (5) If balance remains outstanding, come to an affordable arrangement to repay the balance while retaining security over the property; (6) Amend Mr B and Miss O's credit files to reflect the revised position. |
Summary
Mr B and Miss O complained that Equifinance lent to them irresponsibly when approving a £66,490 secured loan in January 2023 to consolidate unsecured debts. Equifinance recorded combined monthly income of £3,643.67 against expenditure of £3,887.07, showing a £243 shortfall, but Mr B had missed six payments on two loans. The ombudsman found that Equifinance failed to properly verify income and expenditure despite clear warning signs, and that bank statements would have revealed Mr B's actual expenditure was significantly higher due to gambling transactions and other undisclosed spending. Combined with Mr B's worsening payment history and demonstrated lack of financial resilience, a responsible lender would have declined the application. The complaint was upheld and Equifinance was ordered to remove all interest and fees (except the broker fee), treat all payments as capital reduction, and come to an affordable repayment arrangement.
The Ombudsman's reasoning
A responsible lender must assess affordability by taking full account of net income, committed expenditure, and basic living costs, and must verify income and expenditure where there is reason to doubt the information provided. Equifinance had clear reasons to doubt the accuracy of Mr B's financial information: he had missed six payments on two loans despite a recorded shortfall of only £240 per month, indicating either higher actual expenditure or income problems not disclosed. The explanation for missed payments (caring for relative) was not supported by business bank statements which showed income reduction only in June 2022. Equifinance failed to verify income and expenditure through bank statements, which would have revealed that Mr B's actual expenditure was significantly higher than declared due to gambling transactions and other undisclosed spending. Mr B's financial situation lacked resilience, and securing previously unsecured debts posed a clear risk of harm. A responsible lender would have declined the application.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Equifinance Limited, all decisions | 18 | 50% |
| Irresponsible lending, all decisions | 29,406 | 38% |
| Mortgage, all decisions | 24,740 | 22% |
Source
Read the original decision on the Financial Ombudsman Service website