Not upheld: irresponsible lending / unaffordable lending complaint against Madison CF UK Limited trading as 118 118 Money

Decision detail

Summary

Miss H complained that Madison CF UK Limited lent to her irresponsibly by approving a £5,000 loan without conducting proportionate affordability checks and without establishing that the loan was affordable. Madison verified Miss H's declared income of £1,658 through a credit reference agency, applied ONS data for expenditure totalling £1,039.11, and conducted a credit search revealing three active accounts with £3,101 total indebtedness. The affordability assessment showed Miss H had approximately £408.54 remaining after all deductions and before loan repayments. The ombudsman found Madison's checks were reasonable and proportionate, the income verification was acceptable industry practice, and the resulting assessment did not indicate Miss H would be unable to repay sustainably. The complaint was not upheld.

The Ombudsman's reasoning

Madison was required to carry out reasonable and proportionate affordability checks to assess whether Miss H could repay the loan sustainably. The ombudsman found that Madison took appropriate steps by verifying income through a credit reference agency (an acceptable industry-standard method), using ONS data for expenditure (which was reasonable given Miss H's circumstances), and conducting a credit search. The resulting affordability assessment showed Miss H had sufficient financial headroom (£408.54 after all deductions and before loan repayments). While the credit search revealed some indicators of credit reliance (recent loan, high revolving credit usage, prior defaults), these were not sufficient to trigger further enquiries given the absence of current defaults, insolvencies, or CCJs, and the settled nature of prior difficulties. The ombudsman rejected the argument that more forensic analysis (such as bank statements) should have been conducted, finding Madison's proportionate approach reasonable. The fact that income information was pre-populated via a third-party platform was immaterial because Madison independently verified it.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website