Not upheld: irresponsible lending - affordability assessment complaint against Frasers Group Financial Services Limited

Decision detail

Summary

Mr B complained that Frasers irresponsibly provided two credit accounts (Studio £500 and Ace £150-£350) that were unaffordable, claiming he was drowning in debt and selling purchased items to repay it. Frasers rejected the complaint, and an investigator found the affordability checks were proportionate and fair. The ombudsman upheld this finding, determining that the checks were appropriate for the modest credit amounts involved, the income and credit information available at application showed no clear unaffordability, and no indicators of financial difficulty existed prior to the final limit increase. The ombudsman noted there is no regulatory obligation to request bank statements and Frasers could not reasonably have known about Mr B's item-selling strategy.

The Ombudsman's reasoning

The ombudsman applied the regulatory requirement for proportionate, borrower-focused affordability assessments. For the initial Studio account of £500, the checks were proportionate given the modest amount, improved recent financial position despite past arrears marker, and adequate salary relative to credit commitments. For the Ace account of £150, despite the £6,000 income decrease, the very small credit limit meant further checks were not necessary. For limit increases, no indicators of financial difficulty existed prior to May 2020, so the increases were justified. The ombudsman noted there is no regulatory obligation to request bank statements, and Frasers' reliance on credit file review was fair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website