Not upheld: irresponsible lending complaint against Fairscore Ltd trading as Updraft

Decision detail

Summary

Mr W complained that Updraft lent to him irresponsibly when it approved a £5,000 consolidation loan in August 2024. The loan was repayable over 48 months at approximately £180 per month. Mr W had existing credit commitments of £1,199 per month (47% of his net salary) and was living at home with his parents. The ombudsman found that Updraft conducted proportionate checks, verified Mr W's income through Open Banking, and deliberately increased his declared expenditure to ONS standards as a buffer. Although the remaining disposable income was narrow at £51 per month after the new loan repayment, the ombudsman accepted that the assessment was fair given Mr W's clean credit history, the consolidation loan's lower APR compared to existing credit cards, and the fact that consolidation would not increase overall debt repayment commitments. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Updraft's checks were proportionate given the circumstances. Updraft deliberately built in a buffer by increasing Mr W's declared expenditure to ONS standards despite knowing he had lower overheads as he lived with his parents. The lender used the higher of Mr W's declared credit spend (£1,500) rather than the actual figure from credit search results (just under £1,200). After all expenses and existing credit commitments, Mr W had £231 left over monthly, with the new loan repayment of £180 leaving a margin of £51. The ombudsman accepted that the margin was narrow but considered the overall assessment fair given Mr W's positive credit record, the nature of the consolidation loan (which would not increase overall debt repayment commitments), and the lower APR compared to existing credit cards. The ombudsman rejected the investigator's view that additional checks were required.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website