Not upheld: irresponsible lending - proportionality of affordability checks complaint against PDL Finance trading as Mr Lender

Decision detail

Summary

Mr S complained that PDL Finance irresponsibly lent him £500 in June 2025, arguing the lender failed to conduct proportionate checks and would have discovered his poor credit rating and significant existing debt if it had done so. PDL Finance verified Mr S's declared income of £2,358 through Open Banking, obtained expenditure information adjusted by ONS data, and conducted a credit search showing no concerning indicators. The lender calculated Mr S had £224 monthly disposable income after estimated expenditure of £2,134, making the loan repayments affordable. The ombudsman found that given the small loan amount, short 12-month term, modest monthly repayments, and that this was the customer's first loan with the lender, PDL Finance's proportionate checks were reasonable and the lending decision was fair, even though the customer later claimed his financial situation was worse than the information provided suggested.

The Ombudsman's reasoning

The ombudsman applied the FCA's CONC rules on responsible lending and determined that PDL Finance was required to carry out proportionate checks to ensure Mr S could repay sustainably. The ombudsman found that given the relatively small loan amount (£500), short term (12 months), modest monthly repayments (largest £105.52), and that this was the first loan with PDL Finance, a less detailed affordability assessment was proportionate. PDL Finance reasonably verified income through Open Banking, obtained expenditure information, and conducted a credit search. The credit search showed no concerning indicators. Although Mr S later claimed his financial situation was worse than disclosed, the ombudsman found that a more forensic analysis (such as detailed bank statement review) would not have been proportionate in these specific circumstances. The loan repayments appeared affordable on a pounds and pence basis with £224 monthly disposable income remaining, and there was nothing in the information available to PDL Finance that should have prompted further investigation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website