Not upheld: Irresponsible lending complaint against Salad Finance Limited

Decision detail

Summary

Mr S complained that Salad Finance lent to him irresponsibly by failing to conduct adequate affordability checks before approving a £500 loan in April 2025. Mr S argued that his disposable income was artificially inflated by other high-cost loans taken simultaneously and that he was already in a debt cycle evidenced by buy-now-pay-later usage and credit card over-limits. The ombudsman found that Salad Finance's detailed Open Banking analysis of actual income and spending provided a reasonable and proportionate basis for the lending decision, with sufficient discretionary income identified to support sustainable repayments. The ombudsman rejected Mr S's arguments about debt cycling and cumulative debt layering, noting that buy-now-pay-later facilities were being cleared monthly and credit card over-limits would not have been visible on credit files at the time of lending. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Salad Finance's business model appropriately emphasised actual income and expenditure data via Open Banking rather than credit scores. The checks performed were reasonable and proportionate for a £500 loan, involving thorough analysis of actual spending records. Based on the calculations reviewed, there was sufficient disposable income and discretionary spend to support sustainable repayments after accounting for essential spending and existing creditors. The ombudsman rejected Mr S's arguments about debt cycling, cumulative debt layering, and breach of duty of care, finding that buy-now-pay-later use was being cleared monthly, the credit card over-limit would not have been visible on credit files, and the lending agreement clause was a reminder to borrowers rather than a contractual obligation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website