Not upheld: irresponsible lending complaint against Fairscore Ltd trading as Updraft

Decision detail

Summary

Mr K complained that Updraft lent to him irresponsibly when approving an £8,500 personal loan in August 2024 for debt consolidation, despite his substantial existing indebtedness of approximately £30,000-£35,000 across loans, overdrafts and credit cards. The ombudsman found that Updraft conducted proportionate checks including income verification, expenditure analysis, open-banking access and credit file review. Although Mr K was heavily indebted with high credit utilisation and overdraft dependency, the ombudsman accepted that refinancing revolving debt into a consolidated loan with defined repayments was a reasonable debt management approach and that Updraft was entitled to rely on Mr K's stated consolidation intention. The results of Updraft's affordability assessment indicated sustainable repayment, and the subsequent default was not reasonably foreseeable. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Updraft's checks were proportionate given the loan amount, term, and Mr K's circumstances. The results of those checks, including bank statement analysis and credit file review, indicated the loan would be sustainably affordable when accounting for the intended debt consolidation. The ombudsman accepted that refinancing revolving borrowing into a consolidated arrangement with defined repayments is an appropriate debt management method and that Updraft was entitled to rely on Mr K's stated intention to use the loan for consolidation. The subsequent financial difficulties were not reasonably foreseeable from the information available at the time of lending.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website