Partially upheld: Irresponsible lending complaint against Lewisham Plus Credit Union Limited trading as Lewisham + Bromley Credit Union

Decision detail

Summary

Miss M complained that Lewisham + Bromley Credit Union lent to her irresponsibly through a series of loans and top-ups between June 2021 and May 2025. The ombudsman found that while the initial loans and the August 2024 loan were appropriately assessed, L+B failed to conduct proper affordability checks before approving three top-ups (January 2023, June 2023, May 2025) when Miss M had experienced income reductions. L+B also overcharged interest during Miss M's breathing space arrangement and after arrears became apparent. The ombudsman partially upheld the complaint, directing L+B to rework Miss M's account to remove interest and charges from the unapproved top-ups, pay £100 compensation for administrative errors, backdate the default, and remove related credit file entries.

The Ombudsman's reasoning

Although the loan agreements were exempt agreements, L+B still had an obligation to check that lending would be sustainably affordable. L+B's own policy required them to ask about income reductions before approving top-ups, but they failed to do so on three occasions. When Miss M's financial circumstances are examined at the dates of the January 2023, June 2023, and May 2025 top-ups, it is clear that had L+B asked the required questions and conducted proper affordability checks, they could not have fairly approved these top-ups. The ombudsman rejected L+B's argument that Miss M would have answered dishonestly, finding no evidence to support this. L+B also overcharged interest during the breathing space period and after it became apparent Miss M could not clear her arrears. The escalation to solicitors, while upsetting, was not unreasonable given the negligible payment offered (£1 per month) and the significant debt outstanding.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website