Not upheld: Irresponsible lending complaint against Jaja Finance Ltd

Decision detail

Summary

Mr W complained that Jaja Finance Ltd irresponsibly approved a £2,800 credit card account in July 2024 without conducting thorough enough financial checks, given his existing high levels of unsecured borrowing and overdraft reliance. Jaja defended its decision, stating it had conducted a thorough affordability assessment using CRA data, ONS data, and Mr W's declared income, which showed the new borrowing was affordable. The ombudsman found that Jaja's checks were reasonable and proportionate, and the available data at the time showed no obvious signs of financial stress. Even when considering Mr W's actual lower income revealed in bank statements, the new credit card commitment appeared affordable. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while there are no set list of checks lenders must carry out, Jaja's checks should be borrower-focused and proportionate to the level of finance agreed. Jaja obtained data from multiple recognised sources (CRAs, ONS) and conducted an affordability assessment showing net disposable income of approximately £1,100 per month. Even when considering Mr W's actual lower income revealed in bank statements (resulting in approximately £730 net disposable income), the new credit card commitment of £140 per month if fully drawn appeared affordable. The fact that Mr W had an overdraft would not in itself be a reason to refuse credit; what matters is whether the new facility looked affordable, which it did. The ombudsman was satisfied that Jaja's checks were reasonable and proportionate given Mr W's strong credit background and the level of finance involved.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website