Partially upheld: irresponsible lending and unfair interest rate complaint against Loans 2 Go Limited

Decision detail

Summary

Mrs C complained about a £600 loan from Loans 2 Go Limited taken at 678.8% APR over 18 months, arguing it was unaffordable, the interest rate was grossly excessive, and inadequately described. Loans 2 Go had verified income of £2,276 and calculated disposable income of £367 per month, sufficient for the £117 monthly repayment. The ombudsman found that while more thorough checks should have been conducted given Mrs C's recent large borrowing (over £32,000 in six months), bank statement analysis showed actual disposable income of around £325, meaning the loan would still have been approved. The complaint was partially upheld solely because Loans 2 Go failed to adequately address Mrs C's concerns about interest rate fairness in its response, resulting in £250 compensation.

The Ombudsman's reasoning

The ombudsman found that while Loans 2 Go should have carried out more thorough checks given Mrs C's recent large borrowing, the checks it did perform were reasonably close to what more detailed verification would have shown. Bank statement analysis revealed actual disposable income of around £325 per month, which was sufficient to cover the £117 monthly repayment. Therefore, even with more thorough checks, the lending decision would likely have been the same and would have been reasonable. However, Loans 2 Go failed to adequately address Mrs C's concerns about the fairness and level of the interest rate in its response, warranting compensation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website