Upheld: Irresponsible lending complaint against Evolution Lending Limited
Financial Ombudsman decision DRN-6140682 of 2026-02-11T00:00:00+00:00. Irresponsible lending complaint against Evolution Lending Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6140682 |
|---|---|
| Decision date | 2026-02-11T00:00:00+00:00 |
| Firm | Evolution Lending Limited |
| Product | Mortgage |
| Claim type | Irresponsible lending |
| Outcome | Upheld |
| Remedy | Evolution Lending Limited must: (1) recalculate the loan balance to remove all interest and fees; (2) apply all payments made by Mr and Mrs C to reducing the capital balance; (3) if an outstanding balance remains, come to an affordable repayment arrangement with Mr and Mrs C and may retain the charge over their property until repaid; (4) if payments exceed the capital borrowed, refund the overpayments with simple annual interest of 8% from the date of each overpayment to the date of refund, with the option to deduct income tax from the interest element and provide a tax deduction certificate. |
Summary
Mr and Mrs C complained that Evolution Lending Limited irresponsibly lent them £24,000 as a second charge mortgage in 2022, which they found unaffordable. They had a poor credit history with repeated debt consolidation and numerous unsecured debts, only some of which were consolidated by this loan. Evolution argued it had conducted proper affordability checks and the borrowers had never missed payments. The ombudsman upheld the complaint, finding that while Evolution's mathematical calculations were correct, the lending was not sustainable because the surplus of income over expenditure was minimal (£114.74 monthly), the firm used incorrect stress test figures, and it failed to adequately consider the borrowers' high level of unconsolidated debt and credit dependency. The ombudsman ordered Evolution to remove all interest and fees from the loan balance and either arrange affordable repayment or refund any overpayments with 8% interest.
The Ombudsman's reasoning
The ombudsman found that while Evolution's mathematical calculations were correct, the lending was still irresponsible because: (1) the surplus of £114.74 per month was too small to allow for emergencies or unexpected expenses, leaving no margin for error; (2) Evolution used an incorrect stress test figure by applying it to the current mortgage rate rather than the reversion rate as required by guidance; (3) Evolution failed to fairly consider the borrowers' actual expenditure, particularly on clothing; (4) Evolution did not adequately address the sustainability of the lending given the borrowers' high level of unconsolidated debt (£2,634.28 remaining), their credit dependency demonstrated by their bank statements and credit history, and the fact that recent debts had been taken out shortly before the loan application; (5) Mrs C's variable income meant the surplus was even smaller in some months; (6) the borrowers' own statements about the loan causing them significant difficulties supported that it was not sustainable.
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