Not upheld: Irresponsible lending complaint against Creation Consumer Finance Limited

Decision detail

Summary

Mr B complained that Creation Consumer Finance Limited irresponsibly provided him with a £2,000 credit account in August 2020, principally because his income was not verified. Mr B alleged that if income had been verified, Creation would have discovered his actual earnings were significantly lower than his declared £30,000 annual income. The ombudsman found that Creation's checks were reasonable and proportionate given the modest credit limit, Mr B's living situation with parents (reducing typical living costs), absence of other credit, and clean credit history. The ombudsman rejected the argument that income verification was necessary, finding that pre-lending checks must be proportionate to the circumstances. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Creation's pre-lending checks were reasonable and proportionate given the modest credit limit of £2,000 and the information gathered about Mr B's circumstances. The ombudsman considered that reliance on Mr B's declared income was not unreasonable in the context of his living situation (with parents, reducing typical living costs), absence of other credit, and lack of financial problems. The ombudsman rejected the argument that income verification was necessary, finding that such checks must be proportionate to the circumstances of the lending.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website