Not upheld: irresponsible lending and unaffordable loans complaint against Madison CF UK Limited (trading as 118 118 Money)

Decision detail

Summary

Mr W complained that two personal loans from 118 118 Money (£2,000 in October 2020 and £1,000 in April 2023) were unaffordable and should not have been provided. The ombudsman found that the firm conducted proportionate affordability checks by obtaining Mr W's declared income (validated against credit reference agency data), expenditure information, and credit search results. Although Mr W later provided bank statements showing additional spending, the ombudsman concluded that proportionate checks would not have extended to obtaining full bank statements and the firm could not reasonably be expected to know about this spending. The second loan was smaller and came six months after the first was repaid, so did not indicate unsustainable lending. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the FOS approach to irresponsible lending, finding that 118 118 Money's proportionate checks were appropriate for the lending relationship stage. The firm was entitled to rely on Mr W's declared income validated against credit reference agency data. Historic defaults were too old to be concerning. The second loan was smaller and came after a six-month gap, so did not indicate unsustainable lending. Mr W's additional spending revealed later was not something proportionate checks would have uncovered, so the firm could not reasonably be expected to know about it.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website