Not upheld: irresponsible lending - inadequate affordability checks complaint against Madison CF UK Limited, trading as 118 118 Money

Decision detail

Summary

Mr H complained that 118 118 Money irresponsibly granted him a £5,000 loan in February 2021 without adequate affordability checks. The loan required monthly repayments of £166.42 over 60 months. While the ombudsman found that 118 118 Money's initial checks were not fully proportionate given Mr H's credit history (including six instances of missed or late payments in the previous 12 months), subsequent analysis of bank statements showed the loan was affordable. After accounting for committed monthly expenses of approximately £700 and a £10,000 debt-clearing loan from a relative in November 2020, Mr H had approximately £600 in disposable income, making the repayment sustainable. The ombudsman declined to use hindsight regarding Mr H's later financial difficulties and found the complaint not upheld.

The Ombudsman's reasoning

The ombudsman acknowledged that 118 118 Money's initial affordability checks were not fully proportionate given the high interest rate and Mr H's credit history showing multiple payment issues. However, when bank statements were subsequently reviewed, they showed that following the £10,000 loan from a relative in November 2020 which cleared most of Mr H's existing debt, his committed monthly expenses were approximately £700, leaving disposable income of around £600. This meant the loan repayment of £166.42 per month appeared affordable and sustainable. The ombudsman declined to use hindsight regarding Mr H's later financial difficulties and found that 118 118 Money would not have been likely to refuse the loan had it conducted more thorough checks at the time of lending.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website