Not upheld: irresponsible lending complaint against Plata Finance Limited

Decision detail

Summary

Miss A complained that Plata Finance Limited irresponsibly lent her £5,000 in June 2024, given her personal and financial circumstances. Plata obtained Miss A's income details and cross-checked them against credit reference agency information, finding no significant adverse credit history and determining that her income was sufficient to cover the loan repayments alongside her existing commitments. The ombudsman found that Plata's checks were proportionate and reasonably conducted, and that while Miss A's financial situation worsened after the loan was provided, Plata could not have reasonably anticipated this at the time of application. The complaint was not upheld, though the ombudsman reminded Plata of its obligation to exercise forbearance should Miss A experience financial difficulty.

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 A's word but cross-checked her income declaration against credit reference agency data. The credit searches showed no adverse information, and when Miss A's validated income was assessed against her credit commitments and estimated living expenses, she appeared to have sufficient funds remaining to make the loan repayments. While Miss A's actual circumstances may have been worse than reflected in the information provided, Plata could not reasonably be expected to be aware of this at the time of application, and there was nothing to indicate she fell outside the profile of an average borrower.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website