Upheld: Irresponsible lending complaint against Evolution Lending Limited
Financial Ombudsman decision DRN-5831184 of 2025-10-09T00:00:00+00:00. Irresponsible lending complaint against Evolution Lending Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-5831184 |
|---|---|
| Decision date | 2025-10-09T00:00:00+00:00 |
| Firm | Evolution Lending Limited |
| Product | Mortgage |
| Claim type | Irresponsible lending |
| Outcome | Upheld |
| Remedy | Evolution must: (1) remove all interest and fees from the loan balance; (2) treat all payments made as capital repayments; (3) recalculate the outstanding balance; (4) if a balance remains, reach a sustainable repayment arrangement with Miss W; (5) if Miss W has overpaid, refund the excess with 8% simple annual interest from the date of overpayment; (6) remove all adverse credit file entries associated with the loan. |
Summary
Miss W complained that Evolution Lending Limited irresponsibly lent her £20,000 on a second charge in 2019 without properly assessing affordability, and failed to provide adequate support when she fell into arrears in 2022. Evolution applied a stress test lower than the FPC-recommended 3% without justification and failed to adequately verify Miss W's expenditure despite having access to bank statements showing higher spending. The ombudsman found that applying the correct 3% stress test would have shown the loan was unaffordable, as Miss W's outgoings would exceed her income. Evolution was also aware of Miss W's previous payment difficulties and should have been more cautious about converting her unsecured debts to secured debt. The complaint was upheld and Evolution was ordered to remove all interest and fees, recalculate the balance, and arrange sustainable repayment or refund any overpayment with interest.
The Ombudsman's reasoning
Evolution failed to apply the FPC-recommended 3% stress test, instead using a lower percentage without justification or evidence of regard to market expectations. Using the correct 3% stress test would have shown the loan was unaffordable, as Miss W's outgoings would exceed her income. Additionally, Evolution should have doubted Miss W's expenditure information given her previous payment difficulties and the nature of the loan (converting unsecured to secured debt). A responsible lender would have required longer bank statement periods to verify her explanation for higher spending. Evolution therefore breached MCOB 11.6 requirements to assess affordability fairly and reasonably.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Evolution Lending Limited, all decisions | 38 | 57% |
| Irresponsible lending, all decisions | 29,406 | 38% |
| Mortgage, all decisions | 25,098 | 22% |
Source
Read the original decision on the Financial Ombudsman Service website