Partially upheld: Irresponsible lending complaint against Loans 2 Go Limited

Decision detail

Summary

Mrs A complained that Loans 2 Go lent to her irresponsibly when it provided a £1,000 personal loan at 770% APR in February 2024, arguing the loan was unaffordable and the interest rate grossly excessive. Although Mrs A had a poor credit history including a recent default and multiple active credit accounts, Loans 2 Go's affordability assessment showed she had sufficient disposable income to meet the £205.56 monthly repayments. The ombudsman found that while Loans 2 Go could have conducted more thorough checks, even enhanced checks would have led to the same lending decision based on bank statement analysis showing adequate disposable income. However, the ombudsman upheld the complaint in part because Loans 2 Go failed to adequately address Mrs A's concerns about the interest rate fairness, awarding £250 compensation for this procedural failing.

The Ombudsman's reasoning

While Loans 2 Go could have conducted more thorough checks given the risk factors present (poor credit history, recent default, multiple recent loans), the ombudsman found that even with more extensive checks including bank statement review, the firm would have reached the same lending decision. Bank statements showed Mrs A had sufficient disposable income (approximately £1,600 after committed expenditure) to comfortably meet the £205.56 monthly repayment. The presence of overdraft usage did not change this conclusion. However, Loans 2 Go failed to adequately address Mrs A's concerns about the fairness of the interest rate in its response, warranting compensation for this procedural failing.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website