Not upheld: irresponsible lending - failure to conduct reasonable and proportionate affordability checks complaint against Fairscore Ltd trading as Updraft

Decision detail

Summary

Mr G complained that Updraft lent irresponsibly by failing to conduct adequate affordability checks before approving a £3,500 consolidation loan in May 2022. Mr G argued that proper checks would have revealed he had only been in his job for seven months, showed increased credit reliance, and that his bank statements would have evidenced financial distress. The ombudsman found that Updraft's checks were reasonable and proportionate, using verified income through Open Banking (£1,906.44 monthly), expenditure data from the application form and credit file supplemented by ONS modelling, and calculating sufficient disposable income of approximately £295 per month after the new lending. The ombudsman rejected arguments that current account statements should have been reviewed (not proportionate), that consolidation should have been enforced (not a lender requirement), and that a separate unfavourable lending decision proved a debt spiral (cases were distinguishable). The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Updraft's affordability checks were reasonable and proportionate given the loan amount and purpose. Income was verified through Open Banking, and expenditure was assessed using multiple sources including the application form, credit file, and ONS data. Updraft even contacted Mr G to confirm figures and adjusted essential costs upward based on ONS levels. The credit file showed no signs of financial distress, and the calculated disposable income of £295 per month was sufficient to support sustainable repayment. The ombudsman rejected arguments that Updraft should have reviewed current account statements (not proportionate for this loan type), should have ensured consolidation took place (lenders are not required to do this), or that a separate unfavourable lending decision proved a debt spiral (the cases were sufficiently different and separated by nine months).

How this compares

Source

Read the original decision on the Financial Ombudsman Service website