Upheld: unsuitable lending / irresponsible advice complaint against The Loan Partnership Ltd

Decision detail

Summary

Mr F and Miss G complained that TLP mis-sold them a second charge loan of £30,000 for debt consolidation in April 2024. TLP recommended the loan based on the customers' explanation that renovations had caused their debt to increase, but the ombudsman found TLP should have conducted further checks given clear evidence of a debt cycle in the credit file. Bank statements later revealed approximately £20,000 in gambling transactions in the three months before application, representing almost all of Mr F's yearly income. The ombudsman upheld the complaint, finding the loan was unsuitable and unsustainable, and ordered TLP to refund the £2,995 broker fee and pay £400 compensation.

The Ombudsman's reasoning

The ombudsman found that while TLP properly disclosed fees and commission, it failed to take reasonable steps to ensure the loan was suitable. The credit file information provided common sense grounds to doubt the customers' explanation for their debt increase, showing a clear debt cycle of consolidation followed by re-utilisation of credit. TLP should have requested further evidence such as bank statements, which would have revealed the unsustainable gambling expenditure. The recommendation was unsuitable because it allowed the customers to continue an unsustainable debt cycle rather than signposting them to debt advice.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website