Not upheld: cost cap breach and unfair relationship under Consumer Credit Act complaint against Valour Finance Limited trading as Savvy.co.uk

Decision detail

Summary

Mr M complained that Valour Finance Limited breached the regulatory cost cap on a £1,200 instalment loan granted in October 2023, which required total repayment of £2,394.99 (99.6% of the £2,400 maximum permitted). The ombudsman found no breach as the loan complied with all three elements of the cost cap: daily interest/fees limits, fixed default fees, and the 100% maximum total cost. Although the loan was structured to extract maximum permitted charges, this did not constitute a regulatory error. The ombudsman also declined to investigate Mr M's separate affordability assessment complaint, treating it as a new substantive issue requiring Valour's initial investigation before FOS involvement.

The Ombudsman's reasoning

The ombudsman found that the cost cap comprises three elements: daily interest/fees not exceeding 0.8% of the amount borrowed, fixed default fees of £15, and a maximum total cost not exceeding 100% of the amount borrowed. Mr M's loan complied with all three elements, with total costs at 99.6% of the permitted maximum. The ombudsman rejected the argument that the cost cap should not be treated as a target, noting that the FCA deliberately set the cap at a level to balance market viability with consumer protection. While the loan may have been structured to extract maximum permitted charges, this does not constitute an error or breach of regulations. The ombudsman also declined to investigate the separate affordability assessment complaint, treating it as a new substantive issue requiring Valour's initial investigation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website