Partially upheld: irresponsible lending; unfair interest rate; inadequate response to customer concerns complaint against Loans 2 Go Limited

Decision detail

Summary

Mr D complained about a £2,000 loan from Loans 2 Go Limited provided in March 2023 at 355.2% APR over 104 weeks, citing concerns about the high interest rate, threatening communications, and why he was approved despite having three other loans. The ombudsman found the lending decision was fair based on reasonable checks showing sufficient disposable income and up-to-date existing debts, and that the communications were reasonable given the weekly payment schedule. The 355.2% APR did not breach the FCA price cap as the loan term was 24 months rather than the 12-month maximum for High Cost Short Term Credit. However, the ombudsman upheld the complaint in part because Loans 2 Go failed to adequately address Mr D's concerns about the interest rate, awarding £250 compensation for this service failure.

The Ombudsman's reasoning

The ombudsman found that Loans 2 Go carried out reasonable and proportionate checks appropriate for a £2,000 loan. Mr D's declared disposable income of £235 per week (or £740 per month after the firm's estimates) was sufficient to cover the £62.15 weekly repayments. The firm verified income and assessed existing debts, all of which were up to date at the time of lending. The 355.2% APR did not breach the FCA's price cap on High Cost Short Term Credit because the loan term was 24 months, not within the 12-month maximum required for HCSTC classification. The communications from Loans 2 Go were reasonable given the weekly payment schedule and Mr D's non-responsiveness. However, the firm failed to adequately address Mr D's concerns about the fairness of the interest rate, warranting compensation for this service failure.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website