Not upheld: Irresponsible lending complaint against Brent Shrine Credit Union Limited trading as My Community Bank (MCB)

Decision detail

Summary

Miss G complained that MCB lent to her irresponsibly in April 2024 by failing to carry out adequate affordability checks on a £2,200 fixed sum loan. Miss G claimed she was already experiencing financial difficulties and had other credit commitments that should have made it clear she would struggle to repay sustainably. MCB defended their decision, stating they had completed a full credit check, verified her income, and conducted a creditworthiness and affordability assessment showing the loan was affordable. The ombudsman found MCB's checks were reasonable and proportionate, with Miss G's credit file showing no missed payments or signs of financial difficulty, verified income of £2,138 monthly, and calculated disposable income of £640 monthly after accounting for existing commitments and estimated essential expenditure. Although Miss G later entered a debt management plan, the ombudsman assessed the lending decision based on information available at application and found no evidence MCB acted unfairly or irresponsibly.

The Ombudsman's reasoning

The ombudsman found MCB's affordability checks were reasonable and proportionate. MCB verified Miss G's income, reviewed her credit file showing no signs of financial difficulty or persistent debt, estimated her essential expenditure using statistical data and known commitments, and calculated she would have sufficient disposable income (£640 monthly) to sustainably afford the loan repayments (£98.32 monthly). The ombudsman noted that MCB was not aware of Miss G's disability payments being included in her income and that even if they had been, it would have been reasonable to treat them as reliable income. The fact that Miss G later entered a debt management plan does not retrospectively make the lending decision unfair, as the assessment must be based on information available at the time of application.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website