Not upheld: Irresponsible lending complaint against Brent Shrine Credit Union Limited trading as My Community Bank (MCB)

Decision detail

Summary

Mr H complained that MCB lent to him irresponsibly in December 2023 by failing to carry out proportionate affordability checks on a £5,000 loan. Mr H argued MCB should have identified gambling transactions, persistent overdraft usage, rapid debt acquisition, and that his income was inflated by overtime, making the loan unaffordable. MCB defended their decision, stating their checks were appropriate and showed the loan was affordable. The ombudsman found MCB's automated credit checks, income verification via CRA, and use of ONS data to estimate essential expenditure were reasonable and proportionate. The credit file showed no missed payments or signs of financial difficulty at the time of application, and the calculated disposable income of £277 monthly supported affordability. The ombudsman did not uphold the complaint, finding MCB acted fairly based on the information available to them.

The Ombudsman's reasoning

The ombudsman found MCB's affordability checks were reasonable and proportionate. The credit check data showed no signs of financial difficulty, missed payments, or defaults. While Mr H had existing credit, this was expected given the stated purpose of debt consolidation. The income verification was appropriate and the use of ONS statistical data to estimate essential expenditure was standard practice. The calculated disposable income of £277 monthly suggested the loan was affordable. The ombudsman noted that a loan taken out one month prior had not yet appeared on the credit file, so MCB could not reasonably have been aware of it. The ombudsman rejected arguments that MCB should have reviewed bank statements to identify gambling transactions, as this was not required by the proportionate checks standard.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website