Not upheld: irresponsible lending - insufficient affordability checks complaint against Madison CF UK Limited trading as 118 118 Money

Decision detail

Summary

Mr P complained that 118 118 Money lent to him irresponsibly by making insufficient affordability checks when granting a £4,000 loan in July 2024. Mr P argued that reasonable checks would have revealed multiple existing lines of credit and loans from high-cost lenders, requiring enhanced checks that would have prevented the lending. The ombudsman found that while 118 118 Money's checks were not fully reasonable and proportionate, examination of Mr P's actual current account statements revealed undisclosed rental income of approximately £2,993 per month which, combined with his declared salary, provided sufficient disposable income to sustain the loan repayments. The complaint was not upheld as the lending decision was determined to be fair.

The Ombudsman's reasoning

The ombudsman found that while 118 118 Money's checks were not fully reasonable and proportionate due to reliance on modelled expenditure data, verification of income by account turnover alone, and failure to investigate the proximity of multiple new credit facilities, the lending decision was ultimately fair. When examining Mr P's actual current account records, the ombudsman identified undisclosed rental income of approximately £2,993 per month which, when added to the declared salary and the lender's calculated disposable income of £131 per month, resulted in sufficient total disposable income to sustain the loan repayments. The ombudsman concluded that reasonable and proportionate checks would have revealed this additional income and supported the lending decision.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website