Not upheld: irresponsible lending - affordability assessment complaint against North Edinburgh and Castle Credit Union Limited trading as Castle Community Bank (CCB)

Decision detail

Summary

Mr W complained that CCB irresponsibly lent to him by providing two loans (L1 for £5,000 in October 2022 and L2 for £2,500 in September 2023) that were unaffordable and without adequate affordability checks. Mr W argued he had multiple credit commitments, persistent overdraft reliance, variable income, and a pattern of short-interval borrowing that should have raised concerns. CCB defended its lending decisions based on automated checks including credit file review, income verification, and affordability calculations showing sufficient disposable income. The ombudsman found CCB's checks were reasonable and the results supported the lending decisions, with no evidence of financial difficulty or payment problems in Mr W's credit history, and therefore did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman found that CCB's automated checks including credit file review, income verification via Open Banking, and statistical cost-of-living estimates were reasonable and sufficient. The credit checks revealed no signs of financial difficulty, missed payments, or defaults. Mr W's verified income was in line with his declared salary, and the disposable income calculations showed sufficient surplus after loan repayments. The ombudsman rejected Mr W's concerns about persistent overdraft use, variable income components, and pattern of borrowing, finding these did not require further investigation given the overall picture presented by the checks. The ombudsman also noted that the loans were for debt consolidation purposes, which would reasonably be expected to improve Mr W's financial position.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website