Not upheld: irresponsible lending - insufficient affordability checks complaint against Salad Finance Limited

Decision detail

Summary

Mr K complained that Salad Finance irresponsibly lent him £1,200 in December 2024 by failing to conduct sufficient affordability checks, particularly given that he was taking out his third loan within three months and had significant gambling activity. Salad Finance had conducted credit searches, obtained employment and personal details, and reviewed transaction data from Mr K's main bank account through open banking, which showed income of just under £4,200 monthly and committed expenditure of around £2,200, leaving sufficient funds for the £101.77 monthly repayment. The ombudsman found the checks proportionate and noted that Mr K's gambling activity occurred on a second account that Salad Finance did not review and had no reason to review, so the lender could not have been aware of it. The ombudsman concluded that based on the information available to Salad Finance at the time, the loan appeared affordable and the lender did not treat Mr K unfairly, and therefore did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman found that Salad Finance's checks were proportionate given the circumstances. Although Mr K had taken out multiple loans in a short period, the total amount borrowed (£8,200) was not especially large relative to his income. Critically, Salad Finance had already obtained and reviewed transaction data from Mr K's main bank account through open banking, which showed no concerning activity, significant overdraft usage, or indicators of financial difficulty. The ombudsman concluded that Salad Finance was not required to review all of Mr K's bank accounts, and the low monthly payment of £101.77 appeared affordable based on the information available. The ombudsman noted that while Mr K's gambling was significant, it occurred on a second account that Salad Finance did not review and had no reason to review, so the lender could not have been aware of it. The ombudsman distinguished this case from Mr K's other upheld complaint, noting that the other loan involved a significantly higher amount with monthly payments of around £700 and evidence of mortgage arrears, whereas this loan had considerably lower repayments and no evidence of arrears.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website