Loans 2 Go Limited · DRN-3616107

The complaint Mr S complains that Loans 2 Go Limited (“L2G”) gave him three loans he couldn’t afford to repay. What happened In 2019, Mr S took out three loans with L2G. The first was a cash loan, followed by two ‘logbook’ loans, meaning they were secured on Mr S’ car by way of a hire purchase agreement. None of the loans ran concurrently as each new loan was used to settle the previous one. Loan one was taken out in January 2019 and was for £300. It was settled the next day due to loan two starting and paying it off. Mr S made no payments towards loan one. Loan two was for £1,300. Mr S was required to make 18 monthly repayments of around £215. In May 2019, Mr S took out loan three, which he used to settle loan two, in addition to borrowing some additional capital. Loan three was for £1,500 and Mr S was required to make 24 monthly repayments of around £260. The total repayable was £6,252. Mr S began to fall into arrears on loan three soon after taking it out. In March 2022, Mr S complained to L2G to say the loans were unaffordable and he shouldn’t have been given them. He said that had L2G completed appropriate affordability checks before lending it would have seen that Mr S couldn’t afford them. L2G didn’t uphold the complaint. It said that it had carried out thorough affordability checks before approving each agreement. It said this included asking Mr S about his income and regular expenditure as well as checking his income and credit commitments with a credit reference agency. It said that these checks showed that Mr S had sufficient disposable income to afford the borrowing. Our adjudicator didn’t recommend the complaint be upheld. She wasn’t persuaded that L2G completed reasonable and proportionate affordability checks for any of the loans. However, she wasn’t persuaded from the evidence Mr S had supplied that more detailed checks would have likely demonstrated that the borrowing was unaffordable to him. Mr S didn’t agree, so the complaint has been passed to me for a final decision. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Prior to granting credit, L2G were required to complete affordability checks to ensure Mr S would be able to repay the finance without difficulty. There isn’t a set list of checks L2G were required to complete, however, it needed to ensure that any checks it did complete were proportionate in the specific circumstances of that lending decision. In deciding what is proportionate, L2G needed to take into account factors such as (but not limited to): the total

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repayable, the size of the repayments, the cost and type of finance and Mr S’ specific circumstances. Loan one was settled within a day of Mr S taking it out without him making any repayments towards it. It was settled by Mr S taking out loan two. In doing so, loan two simply paid off the capital (which was added to the borrowing on loan two) and no interest was charged. Therefore, I don’t think it’s necessary for me to make any specific findings in relation to this loan. I say this because even if I were to conclude that L2G shouldn’t have granted this loan, Mr S hasn’t suffered any loss as a result. I don’t think L2G completed reasonable and proportionate checks in relation to loan two. I say this because what Mr S declared his financial circumstances to be had noticeably changed from what he declared under loan one. However, there was only one day between the application for loan one and loan two. I think this obvious discrepancy ought to have caused L2G some concern especially as the credit checks it completed showed that Mr S had some relatively recent history of missed payments and arrears on other credit. In the circumstances I think it would have been proportionate for L2G to have verified Mr S’ financial circumstances. L2G says it did this for his income by asking a credit reference agency to check whether Mr S’ income broadly matched what he had declared. While in certain circumstances this might be a reasonable way to ‘verify’ income, I don’t think it was here. I say this because L2G ought to have been on notice that Mr S had been inconsistent about what he earned and had displayed signs of potential financial difficulty. So, I think it should have done more to gain more certainty about what he earned as well as what he was spending his money on. I can’t be certain what evidence L2G would have asked for or seen had it completed proportionate checks. However, I’ve reviewed copies of Mr S’ bank statements from the three months prior to the application as an indication of what L2G would most likely have discovered had it sought to verify Mr S’ financial circumstances in more detail. For clarity, I’m not suggesting L2G were required to, or should have, requested bank statements from Mr S. But, in the absence of anything else, I think it’s reasonable to place significant weight on the information contained in them as to what would likely have been revealed at the time. Having done so, I’ve not seen anything to indicate that L2G would likely have found loan two to be unaffordable to Mr S. The amount of income he declared in his application for loan two appears to be very similar to what he actually earned. Further, the sums he declared for his overall essential expenditure appear to be broadly accurate. It seems that Mr S also had payments to and from other accounts some of which he said were for his partner to cover essential household expenditure. From what Mr S has provided to support his complaint, I’m not persuaded that these demonstrate L2G ought to have realised he couldn’t afford loan two, even if it had done more thorough affordability checks. In summary, his bank statements don’t support that he had insufficient disposable income to afford the repayment to loan two without difficulty. I therefore don’t think L2G acted unfairly or unreasonably by granting loan two. I don’t think L2G completed proportionate affordability checks in relation to loan three either. It was aware that Mr S had paid late on at least one occasion with loan two and the credit checks revealed some further evidence of some payment difficulty with other borrowing. This ought to have indicated to L2G that even though only a few months had passed since loan two, that Mr S’ financial circumstances may have deteriorated. For that reason, I think it should have done more to verify his income and expenditure, rather than relying on what he had declared and what it had tried to gather from a credit reference agency. We’ve asked Mr S to provide us with copies of his bank statements for the months leading

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up to loan three to understand how his circumstances might have changed and what L2G might have discovered if proportionate checks had been completed. However, Mr S hasn’t provided us with the information and evidence we’ve asked for. I therefore haven’t seen anything to persuade me that more thorough affordability checks ought reasonably to have caused L2G to realise the loan was likely to be unaffordable. From the information contained in the statements dated prior to loans one and two, Mr S appears to have had sufficient disposable income to afford the payments under loan three without difficulty. As I’ve not seen anything to demonstrate his circumstances had significantly changed since then and that L2G ought to have seen that, I can’t say that L2G acted unfairly or unreasonably in granting loan three. I note Mr S has told L2G that he is now in financial difficulty and is struggling to repay the remaining balance. I remind L2G of its obligation to treat Mr S fairly and with forbearance when discussing repayment of the outstanding amount. My final decision For the reasons given above, I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr S to accept or reject my decision before 25 August 2022. Tero Hiltunen Ombudsman

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