Irresponsible lending complaints advice

ManyWays

No. Lenders tend to mention CIFAS as people will be scared, they are VERY rare in debt situations.

Altior

There's some irony in making an affordability lending complaint if you deliberately fabricated what you could afford. It sounds like the purpose of the loan may have been distorted on the application too, ie a consolidation loan wasn't used for consolidation.

Rob5342

https://forums.moneysavingexpert.com/discussion/comment/81856264#Comment_81856264

People in desperate situations can do desperate things. The FOS expects the lender to bear a lot of the responsibility when it comes to loans, and they have published some decisions where the borrower has put false income details and they have said the lender should have done more to verify what they said. Anyone recovering from a debt problem should push as hard as they can with every tool they can find so they don't end up in the same situation again.

ManyWays

The regulations say that lenders should verify income for this exact reason:

CONC 5.2A.15

1. This rule applies unless:
   1. the firm can demonstrate that it is obvious in the circumstances of the particular case that the customer is able to make repayments in accordance with CONC 5.2A.12R, so as to make the actions described in (2) to (4) disproportionate; or
   2. the customer has indicated clearly an intention to repay wholly using savings or other assets (see CONC 5.2A.13R).
2. The firm must take reasonable steps to determine the amount, or make a reasonable estimate, of the customer’s current income.

CONC 5.2A.16

1. A firm that proposes to rely on the exception in CONC 5.2A.15R(1)(a) should keep in mind that the burden would be on the firm to demonstrate, if challenged, that the absence of a material affordability risk was obvious such as to make the process of determination or estimation of the customer’s income disproportionate.
2. An estimate of the customer’s income may include a minimum amount or a range, provided that any assumptions on which the estimate is based are reasonable in the circumstances.
3. For the purpose of considering the customer’s income under CONC 5.2A.15, it is not generally sufficient to rely solely on a statement of current income made by the customer without independent evidence (for example, in the form of information supplied by a credit reference agency or documentation of a third party supplied by the third party or by the customer).

[I have added the bold, italic]

The Ombudsman takes the view that a customer should repay the money borrowed, but if it was unaffordable the lender should not be able to profit from this and so interest should be removed. This feels a pretty balanced approach.

Altior

https://forums.moneysavingexpert.com/discussion/comment/81856422#Comment_81856422

I have read some ombudsman decisions and there are nearly always other implications/failings on the lender's part. I'm pretty sure you can't apply for a loan claiming you're employed and you earn £50K when you're on £5K JSA, and the lender is expected to take the responsibility for that, and you win an affordability complaint.

Same goes for example if I borrow £20K for a consolidation loan and take a trip to Las Vegas with the funds instead.

Obviously I don't wish to derail the OP's thread, personally I would not be flagging up that I lied on a credit application to obtain credit, and then complain when the lies achieved what I wanted to happen. I don't know enough about the OP's scenario to know if there was compelling mitigation that would support a complaint.

ManyWays

The first of your examples, the lender should have made a reasonable attempt to verify the borrowers income. If they didn't, they are likely to lose the affordability complaint when the loan is large, as this loan was

The second example, if the consolidation loan would have been affordable if that was what it was used for, then the borrower is unlikely to win the affordability complaint (unless the lender should have realised they had a big gambling problem)

Debtmess2010

Hi just to clarify I borrowed the loan and did consolidate my CC but I seperated from my partner which then led me to borrow again on the CC. I've been managing the repayments up until rerecently when my 17 year old unexpectedly left home which in turn stopped child maintenance, child benefit and UC so left me unable to afford the repayments.

Debtmess2010

Thank you for all of your replies.

I've done a little Google search re: CIFAS markers but what would the implications be for me if they were to put this marker on me? What I've read is that the marker falls off in 6 years ? As I see it my credit file is knackered for 6 years anyway? Is there any other issue I'd need to be aware of? Thank you all for your time and info its so helpful

RAS

With CIFAS marker it is very difficult to get even a basic bank account. Most providers will close any account in your name. So even getting paid or paying bills is difficult.

I'd recommend that you avoid it if you can.

Debtmess2010

oh god that's not good! OK I think I'll leave the FOS for the Castle community loan, thank