Not upheld: irresponsible lending complaint against Oakbrook Finance Limited

Decision detail

Summary

Mr T complained that Oakbrook Finance Limited lent to him irresponsibly across three loans (£3,500, £2,000, and £2,000) without fully understanding his financial position, citing reliance on credit, financial decline, and undisclosed gambling addiction. The ombudsman found that Oakbrook's checks for the first two loans were reasonable and proportionate based on verified income, positive credit data, and calculated disposable income of approximately £2,000. For the third loan, while Oakbrook should have obtained more accurate income verification when it could only verify £2,442 against stated income of £88,800, the ombudsman determined that Mr T's actual income was sufficient to support the loan repayments. The ombudsman concluded that reasonable checks would not necessarily have revealed gambling transactions occurring on separate accounts and that Mr T had not disclosed his gambling addiction to Oakbrook, therefore the complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the FOS approach to irresponsible lending, which requires reasonable and proportionate checks focused on the impact of repayments on the borrower, not just likelihood of repayment. For loans one and two, the checks were reasonable given the loan amounts, verified income stability, positive CRA data, and calculated disposable income of approximately £2,000. For loan three, while the significant discrepancy between stated income (£88,800) and verified minimum income (£2,442) should have prompted additional enquiries such as requesting payslips, the ombudsman found that Mr T's actual income (approximately £4,273 per month based on bank statements) was consistent with previously verified income, resulting in sufficient disposable income of around £1,932 to support the loan repayments of £120.89. The ombudsman concluded that reasonable and proportionate checks would not necessarily have revealed gambling transactions occurring on separate accounts, and Mr T had not disclosed his gambling addiction to Oakbrook. The early settlement of previous loans with interest rebates suggested responsible financial management.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website