Emma brought a complaint to us about her lender, when they refused her request to be compensated for the distress she felt she'd experienced.

What happened

Emma got in touch with us about a logbook loan, which she said was unaffordable. She was approved for a logbook loan of £3,000 in January 2020, to be repaid over 24 months with monthly repayments of approximately £300. Emma told us that she fell into financial difficulty three months later and began struggling to make her monthly repayments.

She contacted the financial business to ask for help, but they said they couldn’t help her. They said they had completed reasonable and proportionate checks before deciding to lend to her, including an income and expenditure check that was verified with bank statements alongside a credit search. It said it had concluded Emma had enough disposable income to meet the monthly repayments.

Emma disagreed and said she felt that had proper checks been completed by the lender before approving her for the loan, it would’ve seen that she had several existing credit commitments. She said she wanted compensation for the distress she experienced, which she said had a severe impact on her mental health and well-being. The business refused to compensate her, so Emma escalated her complaint to our service.   

What we said

Our findings showed that not only did the lender obtain bank statements from Emma, but it used the information from them to calculate an expenditure amount which covered some items which Emma hadn’t mentioned. The lender therefore had enough to be able to make an informed decision on whether to provide this loan, though the information it was provided with might not have given the full picture.

We said it was reasonable for the business to rely on the information they had obtained. Given the repayments involved and the business’ lack of history with the consumer, we didn’t think it was unreasonable for the business to provide Emma with this loan.

However, we said we recognised that the consumer was very upset by the situation she found herself in when she became unable to make her repayments on the loan. We saw that the business had noted in its records that Emma was a vulnerable customer, and when she got in touch with them to say she was in difficulty we thought there was more they could have done to help her, such as setting up a repayment plan.  

In the circumstances, we said the business didn’t do anything wrong in deciding to lend to the consumer. But we did think that they should pay Emma compensation of £200 for the distress and inconvenience caused, when they didn’t step in to help Emma when she was in financial difficulty.