Not upheld: irresponsible lending - affordability complaint against Plata Finance Limited

Decision detail

Summary

Miss D complained that Plata Finance Limited irresponsibly lent her £5,000 in October 2024 as a 36-month loan with monthly repayments of approximately £196, arguing the loan was unaffordable given her financial circumstances. Plata had obtained Miss D's income declaration, cross-checked it against credit reference agency data, conducted credit searches showing no adverse information, and assessed affordability based on her validated income minus estimated living expenses and existing commitments. The ombudsman found Plata's checks were proportionate for a first loan and that Plata was reasonably entitled to conclude the payments were affordable and that the consolidation loan would be used for its stated purpose, particularly given Miss D's clean credit history and lack of prior history of failed consolidations. The ombudsman rejected the argument that Plata should have obtained bank statements, noting there is no requirement for lenders to do so for unsecured lending, and distinguished this case from Miss D's other upheld complaints which involved credit provided later when her circumstances had changed. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Plata carried out proportionate checks appropriate for a first loan by obtaining and cross-checking Miss D's income declaration against credit reference agency data, conducting credit searches, and assessing affordability based on her validated income minus estimated living expenses and existing credit commitments. While acknowledging that detailed bank statement analysis might have revealed additional spending, the ombudsman concluded there was no requirement for lenders to obtain bank statements for unsecured lending, and Plata was reasonably entitled to rely on the information obtained and believe the consolidation loan would be used for its stated purpose given Miss D's clean credit history. The ombudsman distinguished this case from Miss D's other upheld complaints by noting those involved credit provided after this loan when her circumstances had changed.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website