Not upheld: irresponsible lending complaint against Fairscore Ltd (trading as Updraft)

Decision detail

Summary

Mr C complained that Updraft lent irresponsibly when providing a £3,000 debt consolidation loan in July 2023. Mr C had taken out four new lines of credit in the preceding two months and was already overdrawn. The ombudsman found that while Updraft's checks were not initially proportionate, a proper assessment would have required only verification of actual housing and living costs. With Mr C's income of £1,726.61, actual housing costs of £400, and existing credit commitments of £649.78, the loan repayment of £94.36 (5% of income) would have been affordable. The complaint was not upheld and no remedy was ordered.

The Ombudsman's reasoning

The ombudsman found that while Updraft's initial checks were not fully proportionate given the recent multiple credit applications, a proper proportionate assessment would only have required verification of actual housing and living costs. Given the loan size (£3,000) represented only 5% of income and Mr C's actual fixed costs were around £400 monthly with £649.78 in existing commitments, this would have left sufficient disposable income of approximately £676.83 to support the loan repayment. The loan was for debt consolidation and could have improved Mr C's financial position. The credit check showed no over-indebtedness or financial difficulties.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website