Not upheld: irresponsible lending complaint against Gain Credit LLC trading as Drafty

Decision detail

Summary

Mr N complained that Drafty irresponsibly provided him with a £3,000 loan which he could not afford. Drafty conducted a credit check showing no adverse information and confirmed Mr N's income and expenditure using credit reference agency data and national statistics, finding he had approximately £4,000 in monthly disposable income after accounting for housing costs of £1,000 and other expenses, with the loan repayment of £232.55 appearing affordable. Although Mr N subsequently disclosed he had a mortgage that was not reported to the credit reference agency Drafty used, the ombudsman found the loan would still have appeared affordable with this knowledge. The ombudsman concluded that Drafty's checks were reasonable and proportionate, and did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman found that Drafty's pre-lending checks were reasonable and proportionate for the loan amount offered. The credit check showed no adverse information, and Mr N's declarations were confirmed against credit reference agency data and national statistics. With housing costs of £1,000 and other declared expenses factored in, Mr N appeared to have sufficient disposable income (approximately £4,000 monthly) to afford the £232.55 monthly repayment. Although Mr N had a mortgage that Drafty was unaware of, the ombudsman concluded that even with this knowledge, the loan would still have appeared affordable given the housing costs already factored into the assessment. The ombudsman rejected the argument that further checks such as bank statements were necessary, finding the checks completed were proportionate to the circumstances.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website