Partially upheld: irresponsible lending complaint against PDL Finance Limited trading as Mr Lender

Decision detail

Summary

Mrs B complained that Mr Lender lent irresponsibly across three payday loans (£500, £500, and £1,500) taken between June 2023 and September 2024, citing her overdraft use and perceived over-indebtedness. The ombudsman found that Loans 1 and 2 were approved following proportionate checks appropriate to the early lending relationship, with Mrs B's income covering expenses and no adverse credit indicators present. For Loan 3, Mr Lender's offer to reduce the debt to capital only (£395.03) and remove all three loans from the credit file was endorsed as equivalent to upholding the complaint. The complaint was partially upheld only to the extent of endorsing Mr Lender's already-made offer.

The Ombudsman's reasoning

The ombudsman applied the proportionality test for lending checks, considering that less thorough checks are reasonable in early lending relationships unless risk factors suggest otherwise. For Loans 1 and 2, Mr Lender's checks were proportionate given the modest loan amounts, Mrs B's income covering declared expenses, clean credit history, and absence of adverse indicators. Overdraft use alone does not justify refusing a loan application. For Loan 3, Mr Lender's offer to waive interest and remove all loans from the credit file amounts to the same outcome as if the complaint had been upheld, as Mrs B had not yet repaid the capital sum. No evidence of unfair treatment or Section 140A breach was found.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website