Partially upheld: irresponsible lending, excessive interest rate, unfair contract terms, inadequate affordability assessment complaint against Loans 2 Go Limited trading as Loans 2 Go

Decision detail

Summary

Mr M complained about a £2,000 loan provided by Loans 2 Go on 7 October 2023 at 320% APR over 24 months, claiming irresponsible lending, excessive interest rates in breach of the FCA price cap, inadequate affordability checks, and unfair contract terms. Loans 2 Go verified his income at £2,343 minimum monthly and calculated expenditure at £1,783 using credit file and ONS data, resulting in £560 disposable income against the £269.33 monthly repayment. The ombudsman found the lending decision was reasonable, the loan does not constitute High-Cost Short-Term Credit subject to the price cap, and the terms were clearly presented. When Mr M fell into difficulty in April 2024, Loans 2 Go appropriately extended the loan to 58 months at a reduced £100 monthly payment. The complaint was partially upheld only to the extent that Loans 2 Go should pay £150 compensation for not fully addressing concerns about the interest rate.

The Ombudsman's reasoning

The ombudsman found that Loans 2 Go complied with CONC 5.2A creditworthiness assessment requirements. The lender's use of ONS data and credit file information to verify and adjust Mr M's declared income and expenditure was appropriate and actually resulted in a more conservative assessment (£560 disposable income) than Mr M's own declaration (£1,237). The loan does not constitute High-Cost Short-Term Credit as it has a 24-month term, not the maximum 12 months required by the FCA definition, so the price cap does not apply. The credit agreement clearly set out all terms including APR and total cost. Once Mr M experienced difficulty, Loans 2 Go provided appropriate forbearance by extending the loan term to 58 months at a reduced payment of £100 per month. The ombudsman found no evidence that Loans 2 Go was aware of or should have identified Mr M's vulnerability from an APP scam. The only failing identified was that Loans 2 Go did not fully address Mr M's concerns about the fairness of the interest rate, warranting the £150 compensation offer.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website