Not upheld: irresponsible lending complaint against My Finance Club Limited

Decision detail

Summary

Mr D complained that MFC lent to him irresponsibly when he took out a £400 loan in March 2025, claiming MFC failed to conduct adequate affordability checks. Mr D disclosed he was employed earning £3,000 monthly, but was actually unemployed receiving Universal Credit and gambling. MFC verified his stated income through CATO with the highest confidence rating and conducted a credit check showing good repayment history. The ombudsman found MFC's checks were proportionate for a first loan and that MFC had no reasonable means of discovering Mr D's actual unemployment or gambling. The complaint was not upheld as MFC did not lend irresponsibly.

The Ombudsman's reasoning

The ombudsman applied the proportionality test for lending checks, considering that less thorough checks are reasonable in early stages of lending relationships unless risk factors suggest otherwise. MFC's checks were proportionate given the £400 loan amount and the information available. Mr D provided false income information which MFC reasonably verified through CATO with the highest confidence rating. The credit check revealed no financial concerns. For a first loan, it was not unreasonable for MFC not to discover Mr D's gambling or actual unemployment status. The ombudsman rejected the argument that MFC should have conducted additional verification beyond the CATO check, as there was no rational basis for such additional checks given the verification already performed.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website