Not upheld: irresponsible lending complaint against Quidie Limited trading as Fernovo

Decision detail

Summary

Mr M complained that Fernovo lent to him irresponsibly by failing to conduct appropriate affordability checks on two short-term loans (£400 and £450) taken out in May and September 2022. Mr M raised concerns about loan stacking, as Loan 2 was taken out the day after Loan 1 was repaid. The ombudsman found that Fernovo conducted reasonable and proportionate checks by verifying Mr M's declared income through a credit reference agency, obtaining credit search data to verify expenditure, and reasonably relying on statistical data for non-discretionary expenses. Based on the information available, Mr M appeared to have monthly disposable income of £782-£922 and was managing existing credit commitments well with no arrears or payment problems. The ombudsman concluded that the quick succession of loans did not, absent other signs of financial hardship, require more searching enquiries, and that Fernovo lent responsibly based on the proportionate checks conducted. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied CONC regulations on responsible lending and determined that Fernovo's checks were reasonable and proportionate given the small loan amounts (£400 and £450) and short duration. The firm properly verified Mr M's declared income using a credit reference agency service, obtained credit search data to verify expenditure declarations, and reasonably relied on Money Advice Service statistical data for non-discretionary expenses where Mr M's declarations appeared insufficient. Based on the information gathered, Mr M appeared to have substantial monthly disposable income (£782-£922) and was managing existing credit commitments well with no signs of financial difficulty. While the ombudsman acknowledged that more forensic analysis of bank statements might have revealed a different picture, such detailed checks were not proportionate given the loan characteristics. The quick succession of loans (loan stacking concern) was not sufficient to trigger additional enquiries absent other signs of financial hardship, and each loan was independently assessed.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website