Not upheld: irresponsible lending - inadequate affordability checks complaint against Gain Credit LLC trading as Drafty

Decision detail

Summary

Mr C complained that Drafty granted him a £500 running credit facility without conducting appropriate affordability checks while he was on a debt management plan. Drafty approved the facility on 29 May 2024 after verifying Mr C's income of £3,200 monthly and obtaining his declared expenditure of £1,900, resulting in apparent disposable income of £1,300. A credit check showed no defaults or delinquencies, though the DMP was approved the same month and not visible on credit checks. Mr C repaid the facility in full by December 2024 without missing payments. The ombudsman found Drafty's checks were proportionate to the loan amount and circumstances, with sufficient evidence of affordability, and did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman applied CONC section 5.2A, requiring proportionate steps to ensure sustainable repayment. Given the £500 facility with estimated monthly repayments of £57, the ombudsman found Drafty's checks were proportionate. Mr C's declared disposable income of £1,300 monthly, verified income, and clean credit history with no defaults or delinquencies supported the lending decision. The ombudsman rejected the need for more extensive checks such as bank statements, finding them disproportionate given the loan amount and apparent affordability. The DMP was not visible to Drafty at approval. Regarding monitoring, Drafty appropriately checked on Mr C in October 2024 and he reported improved circumstances with no disclosed financial difficulties.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website