Not upheld: irresponsible lending - affordability assessment complaint against First Rate Credit Union Limited

Decision detail

Summary

Mr B complained that FRCU lent to him irresponsibly by approving a £12,000 personal loan in May 2025 that he claimed was unaffordable. FRCU had conducted credit checks, reviewed payslips and Open Banking data, and assessed the loan as sustainably affordable based on Mr B's stated income of £2,300 monthly and essential spending of approximately £1,800 monthly. The ombudsman found FRCU's checks were thorough and reasonable, and the lending decision was fair based on the information available at the time. Mr B's subsequent financial difficulties resulted from undisclosed circumstances (actual dependents and transport costs) and unforeseeable events (income reduction due to sick leave and additional borrowing from other lenders) rather than irresponsible lending by FRCU. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that FRCU's checks were thorough and reasonable, obtaining evidence of credit history, income, and expenditure. The credit file showed Mr B was managing significant debt well with no missed payments. Based on the information Mr B provided and what FRCU verified through Open Banking, the loan repayments appeared sustainably affordable with approximately £700 remaining monthly after credit commitments and essential spending. The ombudsman concluded that FRCU was not required to discover information Mr B did not disclose (actual dependents, true transport costs, vulnerability status) and that subsequent events (sick leave, additional borrowing) were not reasonably foreseeable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website