Not upheld: Irresponsible lending complaint against Iwoca Ltd

Decision detail

Summary

Mr F, acting on behalf of company C, complained that Iwoca misled C into taking a finance agreement that did not meet its needs. Mr F had requested an unsecured overdraft facility but received a revolving credit facility with the full amount paid upfront and requiring a personal guarantee. The broker had told Mr F the loan would be 'completely unsecured' and his assets would not be affected. Mr F cancelled the loan but was forced to reinstate it after other lenders rejected C due to the recent Iwoca loan on its credit file. C later defaulted. Mr F argued Iwoca was liable for the broker's misrepresentations because the broker was acting as Iwoca's agent. The ombudsman rejected this complaint, finding that Iwoca provided clear documentation of the loan terms and personal guarantee, and that the broker was not Iwoca's agent but rather acted as a broker for C.

The Ombudsman's reasoning

The ombudsman found that while the broker may have misrepresented the nature of the facility, Iwoca itself provided clear documentation explaining that the loan was a revolving credit facility requiring applications for drawdown, not a traditional overdraft. The personal guarantee was clearly documented and not buried in paperwork. The ombudsman rejected the argument that the broker was Iwoca's agent, finding no contractual ties, apparent authority, or evidence that the broker could bind Iwoca. Commission payments alone do not create an agency relationship. Iwoca fulfilled its duty of care by clearly presenting the terms and giving Mr F opportunity to review them.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website