Not upheld: Irresponsible lending complaint against The Enterprise Fund Limited (trading as GC Business Finance)

Decision detail

Summary

Mr C, a sole trader, complained that The Enterprise Fund Limited lent him £12,500 irresponsibly for a start-up business loan in January 2024 without undertaking sufficient affordability checks, given his high credit utilisation, unstable income, and existing debt. Mr C subsequently entered a debt management plan and argued the loan was unaffordable and unsustainable. TEFL maintained it had conducted reasonable checks including credit assessment, cashflow review, and income verification, and that Mr C had declared adequate income and a contingency plan. The ombudsman found the checks were reasonable and proportionate, rejected the complaint, and encouraged Mr C to work with TEFL on an affordable repayment arrangement.

The Ombudsman's reasoning

The ombudsman found that TEFL's affordability checks were reasonable and proportionate given the modest loan amount of £12,500, the five-year term, and Mr C's declared circumstances. While Mr C had high credit utilisation and inconsistent income, these factors alone did not make the checks unreasonable. The ombudsman noted that TEFL was entitled to rely on Mr C's declared income and that inconsistent monthly income would not appear unusual for a self-employed person. The ombudsman also found that TEFL's credit check decision was a commercial judgment the service would not interfere with, and that Mr C's subsequent financial difficulties could not fairly be attributed to TEFL's irresponsibility when Mr C had declared both income and a contingency plan at the time of application.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website