Not upheld: irresponsible lending and credit file reporting errors complaint against Gain Credit LLC trading as Drafty

Decision detail

Summary

Mr R complained that Drafty irresponsibly granted him a £400 running credit facility in May 2019 without proportionate affordability checks, and that defaults and a CCJ were incorrectly applied to his credit file. Drafty approved the facility based on Mr R's declared income of £1,250 monthly and a credit check, and Mr R drew down the full amount immediately. When Mr R missed payments in May and June 2019, Drafty issued a default notice in July 2019 and reported the default in November 2019. Mr R later requested a payment plan in July 2021, which failed, leading to a second default notice in October 2021. The account was sold to a third party in October 2023, which subsequently obtained a CCJ in December 2024. The ombudsman found Drafty's initial lending checks proportionate, the defaults correctly applied, and the debt sale permissible under the credit agreement. The CCJ was sought by the third party and therefore outside the ombudsman's jurisdiction. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Drafty's initial lending checks were proportionate for a modest £400 facility with monthly repayments of approximately £45. Relying on Mr R's income declaration of £1,250 per month was reasonable for a first credit facility, and the credit check showing recent adverse information did not necessitate bank statement review given the small credit limit and repayment amount. Although Mr R's actual income was lower, Drafty was entitled to rely on his declaration. The defaults were correctly applied as Mr R failed to meet payments and the account fell more than three months into arrears. The second default notice in 2021 was valid as the account had been returned from collection to set up a payment plan. The sale of the debt to a third party was permitted under the credit agreement terms. The CCJ was sought by the third party, not Drafty, and therefore falls outside the ombudsman's jurisdiction. Mr R's vulnerabilities and mental health difficulties were not disclosed to Drafty and could not reasonably have been known.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website