Not upheld: irresponsible lending complaint against Plata Finance Limited

Decision detail

Summary

Miss J complained that Plata Finance Limited irresponsibly lent her £7,500 in January 2025, which was unaffordable given her personal and financial circumstances. Plata obtained Miss J's declared income and expenditure, cross-checked her income against credit reference agency data, and conducted credit searches showing no adverse information and manageable existing debt levels. The ombudsman found that Plata's checks were proportionate and that Miss J appeared to have sufficient funds remaining after existing commitments to afford the loan repayments. The ombudsman rejected Miss J's complaint, noting that Plata could not reasonably have been aware of her overdraft usage or subsequent financial deterioration without requesting bank statements.

The Ombudsman's reasoning

The ombudsman found that Plata carried out proportionate checks appropriate for the early stage of a lending relationship. Plata did not simply accept Miss J's declarations but cross-checked her income against credit reference agency data, which validated her income claim. The credit searches showed no adverse information and her existing debt was manageable relative to her validated income. When her validated income was reduced by her existing credit commitments and estimated living expenses, she had sufficient funds remaining to afford the loan repayments. The ombudsman noted that Plata was not aware of Miss J's overdraft usage as it did not request bank statements, and there is no prohibition on lending to borrowers who use overdrafts. The ombudsman could not reasonably expect Plata to have foreseen Miss J's subsequent financial deterioration at the time of application.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website