Not upheld: Irresponsible lending complaint against North Edinburgh and Castle Credit Union Limited trading as Castle Community Bank (CCB)

Decision detail

Summary

Mr W complained that CCB lent to him irresponsibly in May 2024 by failing to carry out adequate affordability checks before approving a £2,500 loan, claiming he was already in long-term financial difficulty and relying on credit for essential living costs. CCB defended their decision, stating they had completed full underwriting checks including creditworthiness and affordability assessments, and found the loan affordable. The ombudsman found that CCB's automated checks were reasonable, the credit file showed no signs of financial difficulty or missed payments, and the calculated disposable income of approximately £396 monthly was sufficient to support the loan. The complaint was not upheld as the ombudsman was satisfied CCB acted fairly in their lending decision based on the information obtained.

The Ombudsman's reasoning

The ombudsman found that CCB's automated checks were reasonable and proportionate. The credit file showed no signs of financial difficulty or persistent debt cycles, with Mr W managing all accounts well with no missed payments. CCB verified income, calculated disposable income of approximately £396 monthly after all commitments including the new loan, and applied a buffer. The fact that the loan was intended for debt consolidation would have further improved Mr W's disposable income position. While the ombudsman acknowledged that statistical data for essential expenditure estimates may not capture individual circumstances, there was nothing in the credit check data to suggest Mr W's actual spending would differ significantly from the average. The checks were sufficient and the lending decision was fair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website