Partially upheld: irresponsible lending and administrative error complaint against New Wave Capital Limited trading as Capital on Tap

Decision detail

Summary

W, a contractor company, complained that Capital on Tap lent irresponsibly by granting a revolving credit facility in 2019 and increasing the credit limit three times between 2021, ultimately leading to arrears of £6,764.06 in 2024. W also complained about CoT's handling of a £2,500 settlement offer, continued charging of interest, and sale of the debt to collection agents. The ombudsman found CoT's lending decisions were reasonable based on appropriate affordability assessments and W's positive payment history, and that the terms and conditions permitted CoT's actions regarding interest and debt sale. However, the complaint was upheld in part because CoT acknowledged providing incorrect information about when interest stopped being charged, and compensation of £491.66 was ordered for this error.

The Ombudsman's reasoning

The ombudsman applied the Lending Standards Board's Standards of Lending Practice for business customers as representing good industry practice. The key assessment was whether CoT reasonably believed repayments would be sustainable based on checks conducted at the time. CoT's affordability assessments in 2019 based on current account turnover and cash reserves were reasonable. The subsequent credit limit increases were justified by W's positive credit behaviour, full and on-time payments, and non-utilisation of the full limit. The fact that only minimum payments were made did not demonstrate the Facility was unaffordable. CoT complied with the Standards by offering W the option to opt out of credit limit increases. The terms and conditions permitted CoT to continue charging interest and to sell the debt. CoT fairly considered the £2,500 settlement offer and were not obliged to suggest a revised figure.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website