Upheld: irresponsible lending complaint against Loans 2 Go Limited

Decision detail

Summary

Mr S complained that Loans 2 Go Limited lent him £600 irresponsibly when he was in financial difficulties and also complained about the cost of credit. L2G initially rejected the complaint but later investigated affordability. An Investigator found the loan should not have been granted based on concerning credit search results showing Mr S had a credit card over limit and in arrears, a loan on a repayment plan, multiple overdraft accounts at their limits, and had opened eight new credit accounts within the previous year. The Ombudsman upheld the complaint, finding that despite adequate income and expenditure calculations, the credit file data clearly indicated Mr S was struggling to meet existing creditors and could not afford additional credit. L2G was ordered to remove all interest, fees and charges, refund overpayments with interest, and remove adverse credit file information.

The Ombudsman's reasoning

L2G was required to carry out proportionate checks to ensure Mr S could afford to repay the credit. While the income and expenditure analysis appeared to show sufficient disposable income, the credit search results revealed multiple concerning indicators: a credit card over limit and in arrears, a loan on a repayment plan, multiple overdraft accounts at their limits, and eight new credit accounts opened within the previous year. These factors collectively demonstrated that Mr S was already struggling to meet existing creditors and was likely experiencing current financial difficulties. Therefore, L2G should not have lent to Mr S as he was unlikely to afford the payments without undue difficulty.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website