Not upheld: Irresponsible lending complaint against Loans 2 Go Limited

Decision detail

Summary

Miss R complained that L2G irresponsibly approved a £2,000 loan in August 2024 when she was already struggling financially. The investigator partially upheld the complaint, finding L2G had not carried out sufficient checks and should have identified signs of financial difficulty from her credit file and bank statements. However, the ombudsman reversed this decision, finding that L2G had conducted thorough affordability checks using verified data from credit reference agencies, the ONS, bank statements and payslips, and had applied conservative assumptions in its assessment. The ombudsman concluded that based on the affordability assessment, the loan was affordable at the time of approval, with net disposable income of £788 per month before the new £269 monthly commitment. The ombudsman noted that Miss R's financial difficulties appear to have been caused by job loss occurring months after the loan was approved, not by unaffordability at the point of lending.

The Ombudsman's reasoning

The ombudsman found that L2G conducted a forensic and thorough affordability assessment that went beyond simply accepting Miss R's declared figures. L2G used verified data from external sources (CRAs, ONS, bank statements, payslips) and applied a conservative safety buffer to income. The resulting affordability assessment showed net disposable income of £788 before the new loan commitment of £269, indicating the loan was affordable. The credit check revealed no signs of financial pressure such as CCJs or missed payments. While Miss R had taken out external credit before the loan, this would not have been visible to L2G at the time of its searches, and having existing credit alone is not a reason to decline further borrowing if the new borrowing is affordable. The modest overdraft usage and 11% debt-to-income ratio did not suggest financial difficulty. Miss R's subsequent job loss, which occurred months after approval, appears to be the cause of her financial difficulties rather than evidence of unaffordability at the time of lending.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website